LEADING INDICATORS FOR THE REAL ESTATE MARKET - REAL ESTATE MARKETS, CONSTRUCTION ACTIVITY, MACROECONOMY, COMMODITY PRICES - Empira

 
LEADING INDICATORS FOR THE REAL ESTATE MARKET - REAL ESTATE MARKETS, CONSTRUCTION ACTIVITY, MACROECONOMY, COMMODITY PRICES - Empira
LEADING INDICATORS FOR THE REAL ESTATE MARKET
 REAL ESTATE MARKETS, CONSTRUCTION ACTIVITY,
      MACROECONOMY, COMMODITY PRICES
                 RESEARCH REPORT
                  SEPTEMBER 2020
LEADING INDICATORS FOR THE REAL ESTATE MARKET - REAL ESTATE MARKETS, CONSTRUCTION ACTIVITY, MACROECONOMY, COMMODITY PRICES - Empira
REAL EXPERTS.
REAL EXPERTS.
REAL VALUES.
REAL VALUES.

Erklärung
Erklärung und
           und Prognose
               Prognose von
                         von Wohnungsmieten
                              Wohnungsmieten ––
Bestimmung
Bestimmung wesentlicher
              wesentlicher Einflussfaktoren
                             Einflussfaktoren
mittels
LeadingKorrelationsanalyse
mittels   indicators for the
        Korrelationsanalyse
real estate economy
                 In Zeiten hoher Marktdynamik und steigender Wettbewerbsintensität
                 In
                 sindZeiten   hoher Marktdynamik
                       leistungsfähige     Systeme derund Analyse
                                                           steigender undWettbewerbsintensität
                                                                           Entscheidungsunter-
                Real estate markets, construction activity,
                 sind
                 stützung unverzichtbar. Das Immobilien- undund
                       leistungsfähige     Systeme    der  Analyse         Entscheidungsunter-
                                                                        Markt-Research    arbeitet
                 stützung
                 dabei insbesondere an den Themen Informationserhebung,arbeitet
                              unverzichtbar.   Das Immobilien-     und  Markt-Research
                macroeconomy, commodity prices
                 dabei    insbesondere
                 zahlenbewertung        undan   den Themen Informationserhebung,
                                             Potenzialeinschätzung.
                                                                                             Kenn-
                                                                         Entscheidend ist Kenn-
                                                                                             dabei
                 zahlenbewertung
                 die Kenntnis von und        Potenzialeinschätzung.
                                        Einflussfaktoren,  in Bezug auf  Entscheidend    ist dabei
                                                                            auf immobilienwirt-
                 die  KenntnisZielgrößen.
                 schaftliche       von Einflussfaktoren,   in Bezug
                                               Die vorliegende          aufzeigt
                                                                   Studie   auf immobilienwirt-
                                                                                  Methoden und
                Real  estate markets
                 schaftliche              are similar
                                Zielgrößen.    Die    to other markets
                                                   vorliegende     Studie  and the
                                                                           zeigt     economyund
                                                                                  Methoden      in
                 Ergebnisse einer solchen Parameteranalyse, bezogen auf             die Zielgröße
                general
                 Ergebnissein that  they
                                einer    undergo
                                       solchen     cycles. These cycles
                                                Parameteranalyse,          are irregular
                                                                      bezogen   auf die  in terms
                                                                                        Zielgröße
                 Marktmiete. Die Datengrundlage berücksichtigt die Wohnungsmärkte
                of  their lengthDie
                 Marktmiete.       and  amplitude, however.   It is always a challenge for insti-
                 Deutschlands      in Datengrundlage
                                      Städten ab 70.000  berücksichtigt
                                                            Einwohnern.die Wohnungsmärkte
                tutional    investors
                 Deutschlands          to align ab
                                   in Städten   their real estate
                                                   70.000           investments to new market
                                                            Einwohnern.
                developments. The search for, negotiation, approval and execution of
                transactions lead to considerable delays along the time line. The mar-
                ket data received on a particular day is based on decisions which have
                generally been taken months beforehand – and in the case of some
                construction projects many years ago. With this information basis market
                trends are often identified too late to bring about effective and efficient
                reactions. As real estate markets do not exist in splendid isolation from
                the general economic environment, leading indicators elsewhere in the
                economy can possibly be useful, however. This study is dedicated to the
                search for corresponding parameters which correlate with the real estate
                market and precede it where possible, therefore. Thus a number of lea-
                ding indicators with striking correlations can be identified, which when
                taken alone do not allow for reliable conclusions to be drawn, but taken
                as a whole could serve as early indicators for possible developments on
                the real estate markets.

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LEADING INDICATORS FOR THE REAL ESTATE MARKET - REAL ESTATE MARKETS, CONSTRUCTION ACTIVITY, MACROECONOMY, COMMODITY PRICES - Empira
REAL EXPERTS.
REAL EXPERTS.
REAL VALUES.
REAL VALUES.

Erklärung
Erklärung und
          und Prognose
              Prognose von
                       von Wohnungsmieten
                            Wohnungsmieten ––
Bestimmung
Bestimmung wesentlicher
             wesentlicher Einflussfaktoren
                          Einflussfaktoren
mittels
mittels Korrelationsanalyse
        Korrelationsanalyse
Inhalt                  In Zeiten hoher Marktdynamik und steigender Wettbewerbsintensität
                        In  Zeiten   hoher Marktdynamik             und Analyse
                                                                           steigender
                        sind   leistungsfähige      Systeme der                          undWettbewerbsintensität
                                                                                                 Entscheidungsunter-
                        sind
                        stützung unverzichtbar. Das Immobilien- undund
                               leistungsfähige      Systeme        der    Analyse                Entscheidungsunter-
                                                                                           Markt-Research             arbeitet
                        stützung
                        dabei insbesondere an den Themen Informationserhebung,arbeitet
                                     unverzichtbar.     Das     Immobilien-         und    Markt-Research                Kenn-
01 |   Use of leading indicators
                        dabei      for decisions
                                 insbesondere
                        zahlenbewertung        undonan  investment
                                                          den Themen       and disinvestment.......................4
                                                      Potenzialeinschätzung.      Informationserhebung,
                                                                                             Entscheidend ist Kenn-       dabei
                        zahlenbewertung
                        die Kenntnis von und          Potenzialeinschätzung.
                                               Einflussfaktoren,           in Bezug auf      Entscheidend           ist dabei
                                                                                                  auf immobilienwirt-
       Timing of portfolio
                        die restructuring......................................................................................
                              KenntnisZielgrößen.
                        schaftliche      von Einflussfaktoren,
                                                        Die vorliegende    in Bezug Studie  aufzeigt
                                                                                                  auf immobilienwirt-
                                                                                                          Methoden und          4
                        schaftliche    Zielgrößen.      Die    vorliegende          Studie      zeigt     Methoden          und
       Leading indicatorsErgebnisse
                           in market einer
                                       forecast. ..............................................................................4
                                             solchen      Parameteranalyse, bezogen auf die Zielgröße
                        Ergebnisse
                        Marktmiete.einer     solchen Parameteranalyse,
                                        Die Datengrundlage             berücksichtigt   bezogen        auf die Zielgröße
                                                                                                die Wohnungsmärkte
                        Marktmiete.     Die Datengrundlage
                        Deutschlands in Städten ab 70.000 Einwohnern.  berücksichtigt           die   Wohnungsmärkte
02 |   Indicator systemsDeutschlands
                         in economic and     market research.
                                         in Städten       ab 70.000    ........................................................
                                                                            Einwohnern.                                         6

       Indicator systems on real estate market trends.................................................................6
       Indicator systems for economic development................................................................... 9

03 | Explorative approach to find leading indicators............................................................. 13

       Derive leading indicators from extended cause-effect chains........................................13
       Test of various real estate and macroeconomic time series............................................ 14

04 | Correlation of real estate prices among various countries..............................................16

05 | Correlation of other indicators for the real estate market (construction costs, rents)..... 20

06 | Correlation of general economic indicators (GDP, income, consumption).................... 22

07 | Correlation of specific economic indicators (raw materials, transport, energy)............. 26

08 | Results overview.............................................................................................................28

09 | Conclusion......................................................................................................................34

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LEADING INDICATORS FOR THE REAL ESTATE MARKET - REAL ESTATE MARKETS, CONSTRUCTION ACTIVITY, MACROECONOMY, COMMODITY PRICES - Empira
REAL EXPERTS.
REAL EXPERTS.
REAL VALUES.
REAL VALUES.

Erklärung
Erklärung und
1. Use of leading indicatorsPrognose
                   und Prognose von           von Wohnungsmieten
                                                     Wohnungsmieten ––
                            for decisions on investment and disinvestment

Bestimmung
Bestimmung wesentlicher   wesentlicher Einflussfaktoren
For many years now private and institutional
                                                    Einflussfaktoren
                                                       ion of real estate transactions. This means

mittels
mittels Korrelationsanalyse
investors have focused on real estate. In this         the pronounced cyclic in many real estate

              Korrelationsanalyse
respect there is considerable interest in a            markets justifies the repeated purchase and
stable and economically sustainable capital            sale of real estate, as well as the associated
investment that can be easily planned. Since           costs and workload, in arithmetical terms. Ho-
the beginning of the In   new   millennium
                            Zeiten            there
                                    hoher Marktdynamik wever,unda tactic that follows
                                                                    steigender           the cycle is often
                                                                                  Wettbewerbsintensität
has been a significantIn    Zeiten
                          increase
                         sind       hoher
                                    in  real Marktdynamik
                                             estate
                               leistungsfähige                 und Analyse
                                                       unsuccessful
                                                   Systeme    der   steigender
                                                                       due tound  Wettbewerbsintensität
                                                                               unfavourable      timing and
                                                                                    Entscheidungsunter-
values in virtually everysind  leistungsfähige
                              European
                         stützung          country.
                                    unverzichtbar. Systeme    der Analyse
                                                       the Immobilien-
                                                      Das   corresponding     und
                                                                             loss
                                                                           und      Entscheidungsunter-
                                                                                   of efficiency. arbeitet
                                                                                Markt-Research
                         stützung
In this respect, their underpinning unverzichtbar.
                                          with realan Das
                         dabei insbesondere            denImmobilien-
                                                       The   main
                                                              Themenreason und
                                                                            for Markt-Research
                                                                                 this is the delayarbeitet
                                                                         Informationserhebung,         in  the
                                                                                                        Kenn-
economic factors such    dabei   insbesondere
                             as rents, incomes,
                         zahlenbewertung           an  den    Themen     Informationserhebung,
                                                       provision of information
                                               und Potenzialeinschätzung.           on real estateist
                                                                                 Entscheidend           Kenn-
                                                                                                      market
                                                                                                         dabei
economic strength and    zahlenbewertung
                         die construction
                              Kenntnis voncostsund  Potenzialeinschätzung.
                                                       developments.
                                               Einflussfaktoren,                 Entscheidend
                                                                          The ratios
                                                                    in Bezug    auf    stated
                                                                                      auf           ist latest
                                                                                               in the    dabei
                                                                                           immobilienwirt-
differs greatly. Time anddie  Kenntnis
                            again we see
                         schaftliche      von  Einflussfaktoren,
                                            cyclical Die
                                       Zielgrößen.                  in
                                                       realvorliegende Bezug
                                                             estate market      auf
                                                                             reports
                                                                           Studie     auf  immobilienwirt-
                                                                                        are Methoden
                                                                                    zeigt   an assessment  und
movements with market    schaftliche
                         Ergebnisse    Zielgrößen.
                            values, therefore.
                                       einer  solchenDie
                                                       of vorliegende
                                                            transactions Studie
                                                       Parameteranalyse,    which   zeigt
                                                                              bezogenwere   Methoden
                                                                                          aufinitiated     und
                                                                                                          and
                                                                                              die Zielgröße
                         Ergebnisse    einer  solchen
                         Marktmiete. Die DatengrundlageParameteranalyse,
                                                       executedberücksichtigt bezogen
                                                                   months ago and         auf die  Zielgröße
                                                                                   dieinWohnungsmärkte
                                                                                          the case of con-
                         Marktmiete.
                         Deutschlands    Die
                                          in Datengrundlage
                                             Städten abstruction
                                                           70.000berücksichtigt
                                                                   projects often die
                                                                     Einwohnern.   some  Wohnungsmärkte
                                                                                           years ago. New
                         Deutschlands in Städten ab
Timing of portfolio restructuring                          70.000
                                                       market        Einwohnern.
                                                                 trends   and turning points are thus
                                                       almost inevitably identified too late. In many
The right timing of portfolio restructuring            cases data-related analytics have to be re-
can generate significant additional income             placed by subjective assessments, therefore.
or avoid unnecessary losses. Especially with           In the case of larger portfolios and growing
exogenous shocks that impact on the market,            requirements in terms of risk management
triggered for example by a financial crisis or         and compliance this is increasingly becoming
as of late by the coronavirus pandemic, there          a problem.
is a high degree of uncertainty with regard to
future market developments. Even though it
is no longer possible to hedge earlier values          Leading indicators in market forecast
once a market decline has already commen-
ced, there is at least the question of the ideal       The development of the value of real estate on
point in time for market re-entry.                     a specific market is a decisive parameter for
The right timing for purchases and sales, as           investors and owner-occupiers (profitability,
well as for far-reaching decisions in asset and        security), as well as for the remaining social
portfolio management (e.g. a change of use,            and economic environment (jobs, taxes, city).
new lease), is thus a parameter that is decisive       A market prognosis is generally complicated
to success in the asset and portfolio manage-          by the fact that real estate values do not
ment of institutional real estate investors. The       develop in a linear manner or in ideal cycles.
precise implementation of this requirement is          Real property cycles and crisis scenarios
always difficult in practice. Real estate portfo-      follow a very irregular course (for European
lios can only be amended with a major time             house price indices see Fig. 1). Accordingly,
delay and with large transaction costs. Time           time series-based methods (e.g. chart-based
lags are typical for the fundamental decision-         methods) on their own are only of limited
making process and for the corresponding               suitability for making market forecasts.
search for, negotiation, approval and execut-

                                                     4
                                                     2
                                                     2
LEADING INDICATORS FOR THE REAL ESTATE MARKET - REAL ESTATE MARKETS, CONSTRUCTION ACTIVITY, MACROECONOMY, COMMODITY PRICES - Empira
REAL EXPERTS.
                                  REAL EXPERTS.
                                  REAL VALUES.
                                  REAL VALUES.

                                  Erklärung
                                  Erklärung und
                                            und Prognose
                                                Prognose von
                                                         von Wohnungsmieten
                                                              Wohnungsmieten ––
                                  Bestimmung
                                  Bestimmung wesentlicher
                                               wesentlicher Einflussfaktoren
                                  350.0

                                                            Einflussfaktoren
DE                                                                                                                                                                    AT

                                  300.0

                                  mittels
                                  mittels Korrelationsanalyse
UK

                                          Korrelationsanalyse
                                                                                                                                                                      NL
                                  250.0
FR                                                                                                                                                                    BE
     Development HPI (2000=100)

                                  200.0
IT                                                                                                                                                                    SE
                                  150.0
                                                                 In Zeiten hoher Marktdynamik und steigender Wettbewerbsintensität
SP                                                               In
                                                                 sindZeiten    hoher Marktdynamik
                                                                         leistungsfähige       Systeme der    und Analyse
                                                                                                                      steigenderundWettbewerbsintensität
                                                                                                                                       Entscheidungsunter-            PL
                                  100.0
                                                                 sind
                                                                 stützung unverzichtbar. Das Immobilien- undund
                                                                         leistungsfähige       Systeme        der    Analyse           Entscheidungsunter-
                                                                                                                                  Markt-Research           arbeitet
PT                                                                                                                                                                    CZ
                                  50.0                           stützung
                                                                 dabei insbesondere an den Themen Informationserhebung,arbeitet
                                                                               unverzichtbar.      Das     Immobilien-       und  Markt-Research              Kenn-
GR                                0.0                            dabei     insbesondere
                                                                 zahlenbewertung           undan     den Themen Informationserhebung,
                                                                                                 Potenzialeinschätzung.             Entscheidend ist Kenn-    dabei   HU

                                                                 zahlenbewertung
                                                                 die Kenntnis von und            Potenzialeinschätzung.
                                                                                            Einflussfaktoren,         in Bezug auf  Entscheidend          ist dabei
                                                                                                                                         auf immobilienwirt-
                                             00 01 02 03die04              05 06 von
                                                                       Kenntnis         07 Einflussfaktoren,
                                                                                             08 09 10 11 in            12 Bezug
                                                                                                                            13 14auf 15auf 16       17 18 19
                                                                 schaftliche        Zielgrößen.    Die vorliegende           Studie zeigt immobilienwirt-
                                                                                                                                                 Methoden und
                                                                 schaftliche        Zielgrößen.    Die     vorliegende       Studie
                                                                 Ergebnisse einer solchen Parameteranalyse, bezogen auf die Zielgröße  zeigt     Methoden       und
                                  Abb. 3: Entwicklung Hauspreisindex (unbereinigt), Wachstum zum Vorjahr, jeweils Minimum, Maximum, Mittelwert, Deutschland;
                                  35.0                           Ergebnisse
                                       %Eurostat; eigene Berechnung
                                                                 Marktmiete.       einer  solchen    Parameteranalyse,          bezogen
                                                                                    Die Datengrundlage berücksichtigt die Wohnungsmärkte     auf   die   Zielgröße
                                  Quelle:                             und Darstellung.
DE                                                               Marktmiete.
                                                                 Deutschlands       Diein Datengrundlage
                                                                                          Städten ab 70.000       berücksichtigt
                                                                                                                       Einwohnern.die Wohnungsmärkte                  SE
                                  30.0 %
                                                                 Deutschlands in Städten ab 70.000 Einwohnern.
UK                                                                                                                                                                    PL
                                  25.0 %
FR                                Abb. 3: Entwicklung Hauspreisindex (unbereinigt), Wachstum zum Vorjahr, jeweils Minimum, Maximum, Mittelwert, Deutschland;          CZ
                                  20.0
                                  Quelle:%Eurostat; eigene Berechnung und Darstellung.

IT                                                                                                                                                                    HU
                                  15.0 %

SP                                10.0 %

PT                                5.0 %
                                                                                                                                                                      Max year

GR
                                  0.0 %
                                                                                                                                                                      Min year
     Change HPI y-o-y

                                  -5.0 %
AT

                                  -10.0 %
NL
                                  -15.0 %
BE

                                             00     01    02    03    04     05    06     07    08    09     10   11   12   13    14    15    16    17    18   19

                                  Fig. 1: Development of the house price indices in 14 European countries;
                                  source: Eurostat; own calculation and illustration.

                                  Even with the progressive digitalisation and                            of their own, totally separate from other sub-
                                  transparency of the real estate industry the                            markets, the construction industry and the
                                  delays in market observation cannot be eli-                             general economic environment, the existence
                                  minated completely. An appropriate reaction                             of such leading indicators that allow for con-
                                  time in portfolio management can only be at-                            clusions to be drawn on future developments
                                  tained with other indicators that precede the                           on the real estate market appears more than
                                  actual market development. In this respect it                           probable. These indicators are to be sought
                                  is not individual factors which play a role but                         in parameters that are dependent on the
                                  rather a number of parameters with differing                            real estate markets or are at least closely
                                  levels of relevance. Accordingly, the search is                         related to these, yet also in other segments
                                  one for relevant leading indicators. These have                         of the macroeconomy. The further away an
                                  to be determined in an analytical manner.                               indicator is from the real estate market in the
                                  As real estate markets do not exist in a world                          narrower sense, the better the lead time can

                                                                                                      5
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LEADING INDICATORS FOR THE REAL ESTATE MARKET - REAL ESTATE MARKETS, CONSTRUCTION ACTIVITY, MACROECONOMY, COMMODITY PRICES - Empira
REAL EXPERTS.
REAL EXPERTS.
REAL VALUES.
REAL VALUES.

Erklärung
Erklärung und
          und Prognose
              Prognose von
                       von Wohnungsmieten
                            Wohnungsmieten ––
be, but at the same time the interpretation of these in terms of time where possible. What

Bestimmung
Bestimmung wesentlicher
             wesentlicher Einflussfaktoren
the correlation becomes more difficult. In the is not initially compulsory for this first ex-

                          Einflussfaktoren
following a broad-based test is conducted via  plorative study is an actual direct causal link

mittels
mittels Korrelationsanalyse
various data streams on the real estate mar-   between the respective markets (e.g. supply

        Korrelationsanalyse
ket, and also using economic indicators and    chain in the construction industry, prices for
commodity prices. What is being sought are     newly-built houses, rents). The effects can
indicators which correlate more strongly with  also be indirect.
the real estate market   and  which  precede
                      In Zeiten hoher Marktdynamik und steigender Wettbewerbsintensität
                        In
                        sindZeiten hoher Marktdynamik
                              leistungsfähige    Systeme der und Analyse
                                                                  steigender
                                                                           undWettbewerbsintensität
                                                                                 Entscheidungsunter-
                        sind
                        stützung unverzichtbar. Das Immobilien- undund
                              leistungsfähige    Systeme     der Analyse         Entscheidungsunter-
                                                                             Markt-Research     arbeitet
                        stützung
                        dabei insbesondere an den Themen Informationserhebung,arbeitet
                                   unverzichtbar.    Das  Immobilien-   und  Markt-Research        Kenn-
2. Indicator systems in    economic
                        dabei
                                      and market
                                insbesondere
                                                    research
                        zahlenbewertung      undan    den Themen Informationserhebung,
                                                   Potenzialeinschätzung.     Entscheidend ist Kenn-
                                                                                                   dabei
                        zahlenbewertung
                        die Kenntnis von und       Potenzialeinschätzung.
                                              Einflussfaktoren,   in Bezug aufEntscheidend     ist dabei
                                                                                  auf immobilienwirt-
The use of leading indicators
                        die         is von
                             Kenntnis   common        “On the Predictive
                                              Einflussfaktoren,   in Bezug  Content
                                                                                  auf of
                                                                             aufzeigt    Leading Indi-
                                                                                       immobilienwirt-
                        schaftliche   Zielgrößen.    Die vorliegende    Studie          Methoden und
in general economic schaftliche
                         and marketZielgrößen.
                                        research. Die cators: The  Case  of
                                                          vorliegende StudieU.S. Real  Estate
                                                                                 zeigtauf     Markets”
                                                                                        Methoden     und
                        Ergebnisse einer solchen Parameteranalyse,         bezogen        die Zielgröße
Leading indicators for Ergebnisse
                        the real estate  industry
                                     einer  solchen   (2014).  Among
                                                      Parameteranalyse, the  aspects
                                                                           bezogen     evaluated
                                                                                      auf die      were
                                                                                              Zielgröße
                        Marktmiete. Die Datengrundlage berücksichtigt die Wohnungsmärkte
can thus be based on Marktmiete.
                        experience gathered
                                      Die       in    the “Conference     Board leading economic
                        Deutschlands     in Datengrundlage
                                            Städten ab 70.000  berücksichtigt
                                                                   Einwohnern.die Wohnungsmärkte
the course of many yearsDeutschlands in Städten ab 70.000 Einwohnern.leading indicator” for
                            and  on existing  mo-     index”  and  the “OECD
dels. Various research results have also been         the development of rents. Tests were con-
published for real estate markets in recent           ducted with various additional models which
years. These are often only applicable to very        also differentiate between market phases
specific sub-markets, situations or problems,         (Probit and Markov switching approaches).
however. In the following, examples are pre-          For certain indicators it was possible to see
sented from both areas so as to give an im-           that these preceded the real estate market
pression of possible approaches and results in        by as much as eight quarters. A number of
the determination of leading indicators.              German studies on the housing market have a
                                                      more long-term approach. Thus Dick/Wester-
                                                      heide (ZEW) considered “Determinanten für
Indicator systems on real                             die langfristige Wertentwicklung von Wohn-
estate market trends                                  immobilien” [Determinants for the long-term
                                                      value development of residential real estate]
Real estate market research on leading indi-          (2010), whereby above all structural and
cators is often conducted in a quantitative           long-term factors such as demographics play
manner, databased therefore and using corre-          a role here. Short-term market developments
lation and/or regression analyses. One exam-          are not taken into account, therefore.
ple of this is the study by Miller and Sklarz “A      The analysis of indicators less closely related
note on leading indicators of housing market          to the market, such as commodity prices in
price trends” (1986), which examined the cor-         relation to real estate prices, can produce
relation between various real estate market           leading indicators in certain macroeconomic
parameters and the prices on the US housing           constellations. Thus in “Commodity House
market. As a result it was possible to determi-       Prices” (2013) Leung, Shi and Tang examined
ne a number of indicators which preceded              the residential markets in Australia and New
the price development to a minor extent (by           Zealand. Two economies with a high pro-
up to twelve months). The authors conclude            portion of commodity exports and the cor-
that additional indicators from the financial         responding price sensitivity were examined,
sector and the real economy are necessary to          therefore. The authors noted a fundamental
predict price developments. The analysis of           relationship between commodity markets
additional indicators for price changes on the        and real estate markets. In the two economies
US real estate market was the subject matter          an increase in commodity prices led at least
of the study by Tsolacos, Brooks and Nneji,           indirectly to positive income shocks. Via va-

                                                   6
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LEADING INDICATORS FOR THE REAL ESTATE MARKET - REAL ESTATE MARKETS, CONSTRUCTION ACTIVITY, MACROECONOMY, COMMODITY PRICES - Empira
REAL EXPERTS.
REAL EXPERTS.
REAL VALUES.
REAL VALUES.

Erklärung
Erklärung und
          und Prognose
              Prognose von
                       von Wohnungsmieten
                            Wohnungsmieten ––
rious macroeconomic parameters and causal                   mobilienmärkten: Elemente eines Frühwarn-

Bestimmung
Bestimmung wesentlicher
             wesentlicher Einflussfaktoren
chains there are coupling effects to the local              systems”, [Speculative price development

                          Einflussfaktoren
real estate markets.                                        on the real estate markets: Elements of an

mittels
mittels Korrelationsanalyse
Other indicator systems are geared to esta-                 early-warning system] 2011). The parameters

        Korrelationsanalyse
blishing price bubbles and market risks. In his             used include various interest rates, price-in-
study “Is the Housing Bubble Collapsing? 10                 come ratios related to the real estate market,
Economic Indicators to Watch” (2006) Baker                  credit and money supply growth, as well as
pointed out ten indicators      which      can    signal
                        In Zeiten hoher Marktdynamik        publicundindebtedness
                                                                          steigenderratios.    The system works
                                                                                         Wettbewerbsintensität
an overheating of the   In  Zeiten
                            US         hoher
                                    residential  Marktdynamik
                                                     real   with    und
                                                                   varioussteigender
                                                                             threshold
                        sind leistungsfähige Systeme der Analyse und Entscheidungsunter- Wettbewerbsintensität
                                                                                          values,   which indicate
estate market. Alongsidesind   leistungsfähige
                              transaction       figures Systeme
                                                            a       der
                                                               critical  Analyse
                                                                         status  if
                        stützung unverzichtbar. Das Immobilien- und Markt-Research    und  Entscheidungsunter-
                                                                                     surpassed     and   encourage
                                                                                                              arbeitet
(single-family homes),stützung
                        dabei insbesondere an den Themen Informationserhebung,arbeitet
                           these       unverzichtbar.
                                      also   included      Das  Immobilien-
                                                            reactions    at a    und   Markt-Research
                                                                              political-fiscal  level.          Kenn-
                        dabei
applications for mortgage          insbesondere
                                 loans,
                        zahlenbewertung             undan
                                            vacancies       den Themen
                                                            These     and otherInformationserhebung,
                                                          Potenzialeinschätzung.    realEntscheidend
                                                                                          estate sectorist      Kenn-
                                                                                                              studies
                                                                                                                dabei
and the employment zahlenbewertung
                        levels    in  business      und
                                                    sec-  Potenzialeinschätzung.
                                                            (Fig.  2)  display   very    Entscheidend
                                                                                        interesting
                        die Kenntnis von Einflussfaktoren, in Bezug auf auf immobilienwirt-                 ist dabei
                                                                                                       correlations.
                        die
tors closely related to the   Kenntnis       von    Einflussfaktoren,     in  Bezug    auf
                        schaftliche Zielgrößen. Die vorliegende Studie zeigt Methodenvery
                             real   estate    markets.      Unfortunately     the   points   auf
                                                                                            of     immobilienwirt-
                                                                                               reference     are  und
Such indicator systems  schaftliche
                             are alsoeiner
                        Ergebnisse        Zielgrößen.
                                             useful    in Die
                                                  solchen       vorliegende
                                                            specific    and it isStudie
                                                            Parameteranalyse,              zeigt
                                                                                    scarcely
                                                                                     bezogen        Methoden
                                                                                               possible
                                                                                                 auf              und
                                                                                                            to make
                                                                                                       die Zielgröße
current observations of Ergebnisse
                           the  economy  einer    solchen
                                                and   its   Parameteranalyse,
                                                            any   generalisations.   bezogen
                                                                                       Outside
                        Marktmiete. Die Datengrundlage berücksichtigt die Wohnungsmärkte         aufof die
                                                                                                        theZielgröße
                                                                                                             specific
                        Marktmiete.
management by politicians                  Diein Datengrundlage
                                  and administra-
                        Deutschlands             Städten ab models
                                                                70.000 berücksichtigt
                                                                       and  designated die
                                                                           Einwohnern.     usesWohnungsmärkte
                                                                                                  there are hardly
                        Deutschlands
tors. Thus, DIW Berlin developed              in Städten ab
                                        a correspon-        any70.000
                                                                 leadingEinwohnern.
                                                                            indicators that may be used in a
ding early-warning system for the Federal                   flexible manner and which are stable in the
Ministry of Finance (cf. Dreger/Kholodilin,                 medium term at least for real estate markets.
“Spekulative Preisentwicklung an den Im-

 AUTHOR/SOURCE                        TITLE                             CONTENT/INDICATORS

   Miller, Sklarz;            A Note On                      Study of the relationship between various real
   The Journal                Leading Indicators             estate market parameters (incl. sales volume,
                                                             number of sold vs. listed properties in a specific
   of Real Estate             of Housing Market
                                                             period) and the price trends on the US housing
   Research Vol. 1,           Price Trends                   market; determination of leading predictive
   No. 1 (1986)                                              qualities for price developments for as much
                                                             as twelve months; observation and analysis of
                                                             other indicators from the financial sector and the
                                                             real economy noted as being significant for the
                                                             prediction of price developments

                              Is the Housing                 Presentation of ten indicators to predict develop-
   Baker; CEPR
                                                             ments on the US residential housing market;
   Issue Brief                Bubble Collap-
                                                             including time series on apartment construction,
   (2006)                     sing? 10 Economic              on employment levels in areas closely related to
                              Indicators to Watch            the real estate sector, house price index

   Dick,                      Determinanten für              Demographic developments of particular sig-
   Westerheide;               langfristige Wert-             nificance (íncl. development of population and
                                                             household figures, increasing burden of taxes as
   ZEW-Gutachten              entwicklung von
                                                             a consequence of society aging), other determin-
   (2010)                     Wohnimmobilien                 ants are the development of housing supply,
                              [Determinants for the
                                                             financing conditions etc.
                              longterm value develop-
                              ment of residential real
                              estate]

                                                         7
                                                         2
                                                         2
LEADING INDICATORS FOR THE REAL ESTATE MARKET - REAL ESTATE MARKETS, CONSTRUCTION ACTIVITY, MACROECONOMY, COMMODITY PRICES - Empira
REAL EXPERTS.
REAL EXPERTS.
REAL VALUES.
REAL VALUES.

Erklärung
Erklärung und
          und Prognose
              Prognose von
                       von Wohnungsmieten
                            Wohnungsmieten ––
Bestimmung
Bestimmung wesentlicher
             wesentlicher Einflussfaktoren
 Dreger,              Spekulative                  Development of an early-warning system by

                          Einflussfaktoren
 Kholodilin; DIW      Preisentwicklung             DIW Berlin on behalf of the Federal Ministry of
 Wochenbericht        an den Im-                   Finance; diagnosis of price development and

mittels
mittels Korrelationsanalyse
 Vol. 78 (2011)       mobilienmärkten:

        Korrelationsanalyse
                      Elemente eines
                                                   forecasting of speculative price-jumps on the
                                                   basis of various parameters, e.g. credit growth,
                      Frühwarnsystems              development of per capita GDP, public budget
                      [Speculative price           deficit ratio, liquidity growth
                      development on the real
                    Inestate
                       Zeiten    hoher
                             markets:    Marktdynamik
                                      Elements         und steigender Wettbewerbsintensität
                    In Zeiten
                      of
                    sind         hoher Marktdynamik
                         an early-warning
                           leistungsfähige     Systeme und Analyse
                                                       der   steigenderundWettbewerbsintensität
                                                                              Entscheidungsunter-
                      system]
                    sind
                    stützung unverzichtbar. Das Immobilien- undund
                         leistungsfähige   Systeme     der   Analyse          Entscheidungsunter-
                                                                          Markt-Research     arbeitet
                    stützung
                    dabei insbesondere an den Themen Informationserhebung,arbeitet
                              unverzichtbar.  Das   Immobilien-     und   Markt-Research        Kenn-
 Beracha,           dabei  insbesondere
                      Forecasting
                    zahlenbewertung    undan   den
                                                StudyThemen       Informationserhebung,
                                                        of the extent
                                             Potenzialeinschätzung.     to Entscheidend     ist Kenn-
                                                                            which online searches
                                                                                                dabei
 Wintoki; The       zahlenbewertung
                      Residential
                    die           von und
                        Kenntnis Real        Potenzialeinschätzung.
                                                (Google Search) with the
                                        Einflussfaktoren,    in Bezug auf  Entscheidend     ist dabei
                                                                               words “real estate”
                                                                               auf immobilienwirt-
 Journal of Real      Estate
                    die                         or “rent” inincombination
                             Pricevon Einflussfaktoren,
                        Kenntnis                                 Bezug    aufwith
                                                                               auf the name of a
                                                                                    immobilienwirt-
                    schaftliche Zielgrößen. Die     vorliegende     Studie    zeigt  Methoden und
                                                location can be used to predict extraordinary
 Estate Research      Changes from
                    schaftliche Zielgrößen.   Die   vorliegende     Studie    zeigt  Methoden     und
 Vol. 35, No. 3     Ergebnisse  einer solchen Parameteranalyse,
                      Online Search             price developments in  bezogen     auf die Zielgröße
                                                                          a city; consequently  the
                    Ergebnisse
                    Marktmiete. einer solchen  Parameteranalyse,       bezogen     auf die Zielgröße
 (2013)               Activity Die Datengrundlage         berücksichtigt
                                                intensity of                 die Wohnungsmärkte
                                                             online search queries  can be used to
                    Marktmiete.
                    Deutschlands Die
                                   in Datengrundlage
                                      Städten abestablish
                                                    70.000berücksichtigt
                                                          a deviation (upward
                                                              Einwohnern.    dieorWohnungsmärkte
                                                                                   downward) from
                    Deutschlands in Städten ab  the70.000     Einwohnern.
                                                    average price  development on the US market

 Leung, Shi,          Commodity House              Study of the impact of a change in commodity
 Tang; Regional       Prices                       prices on house prices in economies dependent
 Science and                                       on commodities (ones which primarily export raw
 Urban Econo-                                      materials – Australia, New Zealand); highlighting
 mics 43 (6)                                       of the fundamental significance of price move-
 (2013)                                            ments for raw materials, increases have the same
                                                   effect as positive income shocks, energy raw
                                                   materials generally have an indirect impact on
                                                   macroeconomic parameters, other raw materials
                                                   have a more direct impact on local house prices

 Tsolacos,            On the Predic-               Study of the predictive ability of index series
 Brooks, Nneji;       tive Content of              (incl. Conference Board leading economic index,
 The Journal          Leading Indica-              OECD leading indicator) for changes in rents on
 of Real Estate       tors: The Case of            the US real estate market on the basis of various
 Research Vol.        U.S. Real Estate             models (Probit and Markov switching approa-
 36, No. 4 (2014)     Markets                      ches); consequently Conference Board leading
                                                   economic index has the most exact forecasts on
                                                   changes in direction of rent movements, models
                                                   in part as much as eight quarters in advance

 Ferrari, Pirova-     Identifying early            Search for and assessment of suitable early
 no, Cornacchia;      warning indicators           warning indicators for real estate-related ban-
 European             for real estate-re-          king crises at EU level as well as for individual
 Systemic Risk        lated banking                countries; test of a number of indicators (e.g.
 Board, Occasio-      crises                       credit growth of private households, money
 nal Paper Series                                  supply growth, GDP growth in real terms, ratio of
 No. 8 (2015)                                      bank loans to GDP, public indebtedness, average
                                                   mortgage interest rate); the best performers are
                                                   combinations of variables in the framework of
                                                   multivariate logit models for the early identifica-
                                                   tion of crises; in particular structural real estate
                                                   price variables (incl. price-income gap), inflation,
                                                   short-term money market variables and credit
                                                   variables identified as good indicators

                                               8
                                               2
                                               2
LEADING INDICATORS FOR THE REAL ESTATE MARKET - REAL ESTATE MARKETS, CONSTRUCTION ACTIVITY, MACROECONOMY, COMMODITY PRICES - Empira
REAL EXPERTS.
REAL EXPERTS.
REAL VALUES.
REAL VALUES.

Erklärung
Erklärung und
          und Prognose
              Prognose von
                       von Wohnungsmieten
                            Wohnungsmieten ––
Bestimmung
Bestimmung wesentlicher
             wesentlicher Einflussfaktoren
   Marcato,                         Information            Test of the predictive ability of sentiment

                          Einflussfaktoren
   Nando; The                       Content and Fo-        indicators for the US real estate market on the
   Journal of Real                  recasting Ability      basis of VAR models; along-side macroeconomic

mittels
mittels Korrelationsanalyse
   Estate Research                  of Sentiment           variables (GDP growth rate in real terms, change

        Korrelationsanalyse
   Vol. 38, No. 2
   (2016)
                                    Indicators: Case of
                                    Real Estate Market
                                                           in consumer price index etc.), sentiment indica-
                                                           tors such as procurement manager index, index
                                                           on the mood on the housing market etc. are
                                                           included in models; these increase the predictive
                                 In Zeiten hoher Marktdynamik
                                                           ability und
                                                                   of thesteigender   Wettbewerbsintensität
                                                                          tested models  for development on
                                 In Zeiten
                                 sind      hoher Marktdynamik
                                      leistungsfähige Systeme      und Analyse
                                                                  der    steigender
                                                                                  undWettbewerbsintensität
                                                                                       Entscheidungsunter-
                                                           real estate   markets, primarily restricted to the
                                 sind leistungsfähige
                                 stützung             Systeme
                                           unverzichtbar. Das     der segment
                                                                        Analyse
                                                               Immobilien-
                                                           residential         undund  Entscheidungsunter-
                                                                                    Markt-Research      arbeitet
                                 stützung  unverzichtbar.
                                 dabei insbesondere     an Das
                                                            denImmobilien-        und Markt-Research arbeitet
                                                                   Themen Informationserhebung,                 Kenn-
                                 dabei  insbesondere
                                 zahlenbewertung     undan  den    Themen      Informationserhebung,
                                                          Potenzialeinschätzung.         Entscheidend       ist Kenn-
                                                                                                                dabei
   Wang et al.;                    Urban Real Estate         Construction of a prediction model (support vec-
                                 zahlenbewertung
                                 die Kenntnis  von   und  Potenzialeinschätzung.
                                                     Einflussfaktoren,    in Bezug       Entscheidend
                                                                                        auf  auf            ist dabei
                                                                                                   immobilienwirt-
   International                   Market Early              tor machine   model)   for locations  on the housing
   Journal of                    die Kenntnis
                                 schaftliche   von
                                   Warning Based     Einflussfaktoren,
                                                    on
                                             Zielgrößen.     market
                                                           Die            in Bezug
                                                                      in Peking; Studie
                                                                 vorliegende            auf
                                                                                  among the  auf   immobilienwirt-
                                                                                                parameters
                                                                                            zeigt   Methoden  usedund
   Computational                 schaftliche Zielgrößen.
                                   Support Vector
                                 Ergebnisse  einer solchenDie    vorliegendeindicators
                                                             as early-warning
                                                            Parameteranalyse,     Studie
                                                                                     bezogenzeigt
                                                                                            were the
                                                                                                 aufMethoden
                                                                                                      ratio of realund
                                                                                                      die  Zielgröße
   Intelligence                    Machine: A Case
                                 Ergebnisse                  estate development investments       to GDP,  ratio of
                                 Marktmiete.einer  solchen Parameteranalyse,
                                              Die Datengrundlage                     bezogen
                                                                        berücksichtigt           auf  die Zielgröße
                                                                                           die Wohnungsmärkte
   Systems Vol. 13,                Study of Beijing
                                 Marktmiete.  Die
                                                             real estate investments to fixed assets, growth
                                                   Datengrundlage       berücksichtigt     die  Wohnungsmärkte
   No. 1 (2020)                  Deutschlands in Städten ab      70.000
                                                             rates         Einwohnern.
                                                                   of residential real estate prices
                                 Deutschlands in Städten ab 70.000 Einwohnern.

Fig. 2: Selected studies on real estate sector indicator systems.

Indicator systems for economic                                          Analyse für Deutschland” [Predictive ability
development                                                             of leading indicators: The significance of lea-
                                                                        ding indicators for economic forecasting – An
In general economic research the models                                 analysis for Germany] Hinze studied the sui-
and findings on leading indicators are, as is                           tability of leading indicators and the quality
to be expected, more diverse, more detailed                             of indicator systems. In doing so quality yard-
and often also more well-founded than in                                sticks were developed for leading indicators
the specific segment real estate. Here there                            (incl. fundamental context, lead time, stability,
is verifiable research going back about one                             availability) and these were then compared
hundred years. As long ago as at the begin-                             with well-established indicator systems (incl.
ning of the 1920s the “Harvard Barometer”                               survey-based systems such as business cli-
was designed, an instrument to assess the                               mate, statistical analyses on incoming orders).
US economy and predict developments. A                                  In this way leading indicator properties of the
number of leading, coincident and lagging                               regularly published ifo business expectations
economic indicators were integrated here.                               vis-a-vis the gross domestic product and
This system was not able to predict the global                          industrial output could be shown. This lead
economic depression of 1929, however. It did                            time amounts to a number of months at most,
initiate a number of global research projects                           a period that is too short to be transferred to
in the field of economic indicators and early-                          real estate market decisions. In general this is
warning systems (see Winker, “Empirische                                probably also the case for other opinion- and
Wirtschaftsforschung”, [Empirical Economic                              survey-based indicators as these sentiments
Research], 1997). In the determination of                               are usually based on economic changes that
indicators – also – relevant to the real estate                         are already clearly perceptible.
market a number of studies offer interesting                            The results in a study by Santero and West-
models.                                                                 erlund, “Confidence Indicators and Their Re-
For Germany, for example, in the HWWA                                   lationship to Changes in Economic Activity”
paper from 2003 “Prognoseleistung von                                   (1996), are to be seen in a similar light. This
Frühindikatoren: Die Bedeutung von Früh-                                compares the predictive ability of consumer
indikatoren für Konjunkturprognosen – Eine                              and corporate surveys on the economic cycle

                                                                    9
                                                                    2
                                                                    2
LEADING INDICATORS FOR THE REAL ESTATE MARKET - REAL ESTATE MARKETS, CONSTRUCTION ACTIVITY, MACROECONOMY, COMMODITY PRICES - Empira
REAL EXPERTS.
REAL EXPERTS.
REAL VALUES.
REAL VALUES.

Erklärung
Erklärung und
          und Prognose
              Prognose von
                       von Wohnungsmieten
                            Wohnungsmieten ––
in a number of economies. The predictive              key data for bonds (e.g. spread Germany and

Bestimmung
Bestimmung wesentlicher
             wesentlicher Einflussfaktoren
ability differs from country to country. At the       USA with 10-year government bonds). In an

                          Einflussfaktoren
same time it is established that it is generally expanded observation in “Leading Indicators

mittels
mittels Korrelationsanalyse
only possible to forecast significant changes in a Globalised World” (ECB Working Paper,

        Korrelationsanalyse
in a meaningful manner using survey techni-           2009) Fichtner / Rüffer / Schnatz used not
ques. This classification is confirmed by Kho-        only regional indicators but also international
lodilin and Kooths in “Konjunkturelle Frühin-         parameters and thus optimised the prognosis
dikatoren in der Krise: InWeiche   Fakten   stärker
                            Zeiten hoher Marktdynamik for the undrespective
                                                                   steigender    domestic    industrial pro-
                                                                                   Wettbewerbsintensität
                         In
als harte” [Leading economicZeiten  hoher
                                 indicators Marktdynamik
                                             in the   duction.und  steigender      Wettbewerbsintensität
                         sind leistungsfähige Systeme der Analyse und Entscheidungsunter-
                         sind
crisis: Soft facts are strongerleistungsfähige
                         stützungthan  hard facts]
                                    unverzichtbar.Systeme    der Analyse
                                                      An Immobilien-
                                                     Das    interesting         und
                                                                             research
                                                                            und       Entscheidungsunter-
                                                                                         approach arbeitet
                                                                                  Markt-Research       is the
                         stützung
(2009). Accordingly, survey-based   unverzichtbar.
                                        indicators   Das   Immobilien-
                                                      evaluation    of      und
                                                                        internet  Markt-Research
                                                                                   texts,
                         dabei insbesondere an den Themen Informationserhebung, Kenn-                 arbeitet
                                                                                           publications   and
are above all of use in dabei    insbesondere
                         economically    turbulentan  den
                                                      other  Themen
                                                              texts.  A   Informationserhebung,
                                                                           recent   study
                         zahlenbewertung und Potenzialeinschätzung. Entscheidend ist dabei  by  Kalamara Kenn-
                                                                                                            et
times. Calmer economic   zahlenbewertung
                             phases,  in       und
                                          contrast, Potenzialeinschätzung.
                                                      al. “Making    text   count: Entscheidend
                                                                                     economic
                         die Kenntnis von Einflussfaktoren, in Bezug auf auf immobilienwirt-        ist  dabei
                                                                                                 forecasting
are better recorded with die  Kenntnis
                              more
                         schaftliche     von Einflussfaktoren,
                                    complex     and Die
                                       Zielgrößen.    using        in Bezug
                                                              newspaper
                                                          vorliegende             auf(2020)
                                                                               text”
                                                                             Studie    auf immobilienwirt-
                                                                                      zeigt    searched und
                                                                                             Methoden      ar-
quantitative prognosisschaftliche
                          models.      Zielgrößen.   Die  vorliegende
                                                      ticles  and  keywords  Studie
                                                                                  fromzeigt  Methoden
                                                                                         three
                         Ergebnisse einer solchen Parameteranalyse, bezogen auf die Zielgröße   British    und
                                                                                                         daily
Concrete ratio prognoses Ergebnisseare einer
                         Marktmiete.    Die  solchen Parameteranalyse,
                                         modelled     newspapers
                                             Datengrundlage                     bezogen
                                                                      (The Guardian,
                                                                berücksichtigt             auf die
                                                                                           The     Zielgröße
                                                                                                Daily
                                                                                     die Wohnungsmärkte Mirror,
more frequently for Marktmiete.
                          aggregated    Die  Datengrundlage
                                        economic      The       berücksichtigt
                                                            Daily  Mail).
                         Deutschlands in Städten ab 70.000 Einwohnern.      Specific die  Wohnungsmärkte
                                                                                      relevant  words/word
parameters such as GDP.  Deutschlands
                             Thus Grasmannin Städten
                                                and ab    70.000
                                                      groups    (e.g.Einwohnern.
                                                                       “uncertainty”) are counted and
Keereman looked at the topic “An indicator-           processed using machine learning processes.
based short-term forecast for quarterly GDP           The objective is the forecasting of macroeco-
in the euro area” (2001). Using OLS estimates nomic key indicators such as GDP, inflation
(ordinary least squares) it was possible to           and unemployment levels using text-based
determine the quarterly development of GDP predictions. This alternative form of forecas-
relatively well. Indicators included exchange         ting can attain good results in particular with
rates, passenger vehicle sales, survey results        upcoming crises.
(retail trade, construction industry) as well as

 AUTHOR/SOURCE                      TITLE                            CONTENT/INDICATORS

  Santero, West-            Confidence                    Study of the predictive quality of consumer and
  erlund; OECD              Indicators and                corporate surveys on trade cycles and output
                                                          in various economies, corporate surveys have
  Economics                 Their Relationship
                                                          advantages over consumer surveys, degree of
  Department                to Changes in                 predictive ability varies from country to country,
  Working Papers            Economic Activity             mostly only clear output changes can be antici-
  No. 170 (1996)                                          pated in corresponding survey results

  Fritsche,                 Leading Indicators            Test of a number of putative leading indicators
  Stephan; DIW              of German                     (e.g. ifo Business Climate Index, new orders in the
                                                          manufacturing industry, short- and long-term in-
  Discussion                Business Cycles:
                                                          terest rates, money supply) to a reference series
  Paper No. 207             An Assessment of              for industrial production; in particular ifo indica-
  (2000)                    Properties                    tors and series for new orders promising, others
                                                          only with little predictive ability; VAR model with
                                                          four best indicators only suitable with a lead time
                                                          of up to three months

                                                     10
                                                      2
                                                      2
REAL EXPERTS.
REAL EXPERTS.
REAL VALUES.
REAL VALUES.

Erklärung
Erklärung und
          und Prognose
              Prognose von
                       von Wohnungsmieten
                            Wohnungsmieten ––
Bestimmung
Bestimmung wesentlicher
             wesentlicher Einflussfaktoren
 Grasmann,             An indicator-ba-                 Quarterly GDP prognosis on the basis of various

                          Einflussfaktoren
 Keereman;             sed short-term                   indicators (incl. effective exchange rate in real
                                                        terms, vehicle sales, survey on status in retail

mittels
mittels Korrelationsanalyse
 European              forecast for

        Korrelationsanalyse
                                                        trade and construction sector, spread between
 Commission            quarterly GDP in                 German and US bonds); generally promising
 Economic Paper        the euro area                    results on the basis of OLS estimates
 No. 154 (2001)
                     In Zeiten hoher Marktdynamik und steigender Wettbewerbsintensität
                     In Zeiten
                     sind         hoher Marktdynamik
                           leistungsfähige     Systeme der  und Analyse
                                                                   steigender undWettbewerbsintensität
                                                                                     Entscheidungsunter-
 Hinze; HWWA         sind  leistungsfähige
                     stützung    unverzichtbar. Das Immobilien- undund
                       Prognoseleistung        Systeme
                                                   General der    Analyse
                                                              study  of the          Entscheidungsunter-
                                                                             requirements    placed on
                                                                                Markt-Research          lea-
                                                                                                      arbeitet
 Discus-             stützung
                       von Früh-
                     dabei       unverzichtbar.   Das
                                                   dingImmobilien-
                                                          indicators   andund   Markt-Research
                                                                             their quality
                              insbesondere an den Themen Informationserhebung, Kenn-
                                                                                            for       arbeitet
                                                                                                predictions
                     dabei    insbesondere         (e.g. ifo Business Informationserhebung,
                                                                        Climate Index, Early Bird Indica-
 sion Paper 236        indikatoren:
                     zahlenbewertung   Die undan   den     Themen
                                                Potenzialeinschätzung.            Entscheidend       ist Kenn-
                                                                                                         dabei
                                                   tor); suitable for short-term       forecasts based    on
 (2003)              zahlenbewertung
                       Bedeutung
                     die  Kenntnis von      und Potenzialeinschätzung.
                                      von Einflussfaktoren,        in Bezug       Entscheidend       ist dabei
                                                   the current status;     otherauf
                                                                                  thanauf
                                                                                        thisimmobilienwirt-
                                                                                             generally only
                     die  KenntnisZielgrößen.
                       Frühindikatoren
                     schaftliche      von Einflussfaktoren,
                                                  Die  vorliegende
                                                   suited          in Bezug
                                                            to a limited  Studie
                                                                          degreeauf   auf immobilienwirt-
                                                                                   tozeigt   Methoden
                                                                                      deriving  conclusionsund
                     schaftliche
                       für Konjunk-
                     Ergebnisse     Zielgrößen.   Die
                                                   on  vorliegende
                                                       developments       Studie
                                                                         in the
                                    einer solchen Parameteranalyse, bezogen auf real zeigt
                                                                                      economyMethoden      und
                                                                                                die Zielgröße
                     Ergebnisse
                       turprognosen
                     Marktmiete.    einer  solchen Parameteranalyse,          bezogen
                                     Die Datengrundlage berücksichtigt die Wohnungsmärkte  auf  die Zielgröße
                     Marktmiete.
                       - Eine Analyse
                     Deutschlands    Die
                                       in Datengrundlage
                                          für
                                          Städten ab 70.000    berücksichtigt
                                                                    Einwohnern.die Wohnungsmärkte
                     Deutschlands
                       Deutschland     in Städten  ab  70.000       Einwohnern.
                       [Predictive ability of
                       leading indicators: The
                       significance of leading
                       indicators for economic
                       forecasting – An analy-
                       sis for Germany]

 Fichtner, Rüffer,     Leading Indicators               Study of the predictive ability of OECD compo-
 Schnatz; ECB          in a Globalised                  site leading indicators (CLI) for eleven countries,
                                                        in addition to country-specific series and their
 Working Paper         World
                                                        predictive ability for the respective industrial pro-
 Series No. 1125                                        duction, the value added of the implementation
 (2009)                                                 of international indicators to forecast domestic
                                                        development is also tested; models with CLI ge-
                                                        nerally prove themselves to be suitable or better
                                                        alternatives to tested benchmark models, above
                                                        all with a lead time of four to eight months better
                                                        results, the inclusion of international CLI series
                                                        improves forecasts for some countries, in parti-
                                                        cular over the observed time periods, increasing
                                                        impact of globalisation in the national context is
                                                        highlighted

 Kholodilin,           Konjunkturelle                   Creation of a meaningful leading indicator
 Kooths; DIW           Frühindikatoren in               system; comparison of the projection quality of
                                                        hard and soft indicators; disaggregated method
 Wochenbericht         der Krise: Weiche
                                                        with leading indicators at sector level perform
 Nr. 21 (2009)         Fakten stärker als               best, survey-based indicators have advantages in
                       harte                            times of a turbulent economy, more comprehen-
                       [Leading economic                sive models in calmer times
                       indicators in the crisis:
                       Soft facts are stronger
                       than hard facts]

                                                   11
                                                    2
                                                    2
REAL EXPERTS.
REAL EXPERTS.
REAL VALUES.
REAL VALUES.

Erklärung
Erklärung und
          und Prognose
              Prognose von
                       von Wohnungsmieten
                            Wohnungsmieten ––
Bestimmung
Bestimmung wesentlicher
             wesentlicher Einflussfaktoren
   Drechsel,                       Outperforming         Study of possible improvements to the IMF

                          Einflussfaktoren
   Giesen, Lindner;                IMF Forecasts by      World Economic Outlook taking into conside-

mittels
mittels Korrelationsanalyse
                                                         ration individual leading indicators (e.g. world
   IWH Discussion                  the Use of Leading

        Korrelationsanalyse
                                                         trade, oil price, OECD leading indicators, global
   Papers 4 (2014)                 Indicators            industrial production) for the entire world, as well
                                                         as separately in advanced economies and deve-
                                                         loping countries; in general improvements to IMF
                                                         forecasts can be attained with series observed in
                                In Zeiten hoher Marktdynamik und steigender Wettbewerbsintensität
                                In Zeiten hoher          the course
                                                Marktdynamik    und of  a year (on aWettbewerbsintensität
                                                                      steigender     monthly basis), howe-
                                sind leistungsfähige Systeme    der   Analyse   und Entscheidungsunter-
                                                         ver there are differing results for advanced and
                                sind leistungsfähige Systeme
                                stützung unverzichtbar. Das     der   Analyse
                                                             Immobilien-        und   Entscheidungsunter-
                                                                             und Markt-Research        arbeitet
                                                         emerging   economies
                                stützung   unverzichtbar.
                                dabei insbesondere      an Das
                                                            denImmobilien-        und Markt-Research arbeitet
                                                                    Themen Informationserhebung,                Kenn-
                                dabei
                                zahlenbewertung und Potenzialeinschätzung. Entscheidend ist Kenn-
                                        insbesondere    an  den     Themen      Informationserhebung,            dabei
   Galli; SNB                   zahlenbewertung
                                die  Kenntnis
                                  Which        von und
                                          indicators      Potenzialeinschätzung.
                                                     Einflussfaktoren,
                                                             ConstructioninofBezug      Entscheidend
                                                                                       auf
                                                                                an index forauf    monthlyist
                                                                                              the immobilienwirt-dabei
                                                                                                             illust-
   Working Papers               die  Kenntnis
                                schaftliche    von
                                  matter? Analyzing  Einflussfaktoren,
                                                             ration of  thein Bezug
                                                                            Swiss      auf
                                                                                   economy  auf
                                                                                             as animmobilienwirt-
                                             Zielgrößen. Die vorliegende Studie zeigt Methodentound alternative

   Issue 08 (2017)              schaftliche
                                Ergebnisse   Zielgrößen.
                                  the Swiss einer  solchenDie
                                             business            vorliegende
                                                             consideration
                                                            Parameteranalyse,     Studie
                                                                             of GDP, basedzeigt
                                                                                     bezogen       Methoden
                                                                                            on a broad
                                                                                                 auf
                                                                                                         compila-und
                                                                                                      die Zielgröße
                                Ergebnisse   einer solchen   tion of available monthly
                                                            Parameteranalyse,           and quarterly
                                                                                     bezogen     auf    indicators
                                                                                                      die Zielgröße
                                Marktmiete.
                                  cycle usingDie Datengrundlage         berücksichtigt
                                                             (total of 17                 die Wohnungsmärkte
                                                                          indicator categories, incl. GDP, labour
                                Marktmiete.
                                Deutschlands  Die  Datengrundlage
                                  a large-scalein Städten ab     70.000 berücksichtigt
                                                                            Einwohnern.   die  Wohnungsmärkte
                                                             market,   construction  sector, retail trade sector,
                                Deutschlands    in Städten ab
                                  mixed-frequency                70.000
                                                             financial      Einwohnern.
                                                                        markets,  consumption, banking sector,
                                   dynamic factor                each with numerous variables); broad indicator
                                                                 set proves to be useful in the factor model for
                                   model
                                                                 forecasting the Swiss business cycle, taking
                                                                 into account variables from other economies as
                                                                 well as the financial sector predicts Swiss GDP
                                                                 development better than a model merely based
                                                                 on domestic indicator series not closely related
                                                                 to the financial markets

   Garnitz,                        Forecasting GDP               GDP prognosis in a sample of 44 countries and
   Lehmann,                        all over the world            three country aggregates (EU27, eurozone,
                                                                 world) on the basis of leading survey data
   Wohlrabe;                       using leading
                                                                 from the ifo World Economic Survey (WES); on
   cesifo Working                  indicators based              average WES indicators perform better than
   Paper Series                    on comprehensive              autoregressive benchmark models, inclusion of
   (2019)                          survey data                   WES indicators for the three most important
                                                                 trading partners often improve the forecast for
                                                                 the respective domestic GDP development

                                                                 Forecasting of macroeconomic key parameters
   Kalamara et                     Making text
                                                                 such as GDP, inflation, level of unemployment by
   al.; Bank of                    count: economic               analysing articles (editorials, comment pieces/
   England Staff                   forecasting using             opeds) in three British daily newspapers (The
   Working Paper                   newspaper text                Guardian, The Daily Mirror, The Daily Mail); test
   No. 865 (2020)                                                of various methods from simply counting certain
                                                                 words/word groups (e.g. uncertainty) through
                                                                 to a combination of machine learning processes;
                                                                 text-based forecasts with good performance, in
                                                                 particular with upcoming crises

Fig. 3: Selected studies on economic indicator systems.

                                                            12
                                                             2
                                                             2
REAL EXPERTS.
                 REAL EXPERTS.
                 REAL VALUES.
                 REAL VALUES.

                 Erklärung
                 Erklärung und
                 3. Explorative approach to Prognose
                                   und Prognose von            von Wohnungsmieten
                                            find leading indicators
                                                                     Wohnungsmieten ––
                 Bestimmung
                 Bestimmung wesentlicher  wesentlicher Einflussfaktoren
                  From the experiences with and approaches
                                                                    Einflussfaktoren
                                                                          which is devoted intensively to parameters

                 mittels
                 mittels Korrelationsanalyse
                  to economic and business research, and also             such as rents, purchase prices, vacancies, let-

                              Korrelationsanalyse
                  from various real estate market studies, it             ting performance, absorption, transaction vo-
                  is possible to derive potential indicators for          lume etc. and which explains the correspon-
                  which one would assume there to be correla-             ding correlations. On the other hand, there is
                  tions to the real estate In
                                           market.
                                               ZeitenThe  correspon-
                                                        hoher             the large
                                                               Marktdynamik       und field  of macro-economic
                                                                                        steigender                    research,
                                                                                                     Wettbewerbsintensität
                  ding tests are necessary In
                                           sindZeiten
                                              to rank   hoher
                                                       the     Marktdynamik
                                                           relevance.
                                                  leistungsfähige         whichder
                                                                     Systeme      und   steigender
                                                                                   is conducted
                                                                                       Analyse       Wettbewerbsintensität
                                                                                                    by
                                                                                                  und   numerous institutes
                                                                                                       Entscheidungsunter-
                  In the framework of this sind   leistungsfähige
                                              study
                                           stützung  numerous    dataSysteme
                                                        unverzichtbar.            der Analyse
                                                                          andImmobilien-
                                                                         Das    qualified     undund
                                                                                           economists  Entscheidungsunter-
                                                                                                        and which considers
                                                                                                    Markt-Research       arbeitet
                  series have been gatheredstützung
                                           dabei and    unverzichtbar.   Das
                                                         analysed toan factors
                                                    insbesondere               Immobilien-
                                                                          den Themen          areas of the economy,arbeitet
                                                                                              und   Markt-Research
                                                                                    from allInformationserhebung,         and in
                                                                                                                           Kenn-
                  this end, not only on thedabei    insbesondere
                                               real estate
                                           zahlenbewertung  market
                                                                 undinan  den Themen
                                                                          particular   from Informationserhebung,
                                                                       Potenzialeinschätzung.the labour,  financial and
                                                                                                     Entscheidend      ist Kenn-
                                                                                                                           com-
                                                                                                                           dabei
                  the narrower sense, but  zahlenbewertung
                                             also
                                           die   Kenntnis   von und
                                                   on the economic     Potenzialeinschätzung.
                                                                          modity markets.
                                                                  Einflussfaktoren,     in Bezug     Entscheidend
                                                                                                Interdependence
                                                                                                    auf                ist dabei
                                                                                                                      and
                                                                                                        auf immobilienwirt- thus
                                           die
                  environment, such as economic  Kenntnis
                                           schaftliche      von   Einflussfaktoren,
                                                       development,
                                                          Zielgrößen. Die               in
                                                                          alsovorliegende  Bezug
                                                                                in part leading     auf auf
                                                                                                   indicators
                                                                                               Studie         immobilienwirt-
                                                                                                                are discussed
                                                                                                       zeigt Methoden        und
                                           schaftliche
                  the prices for raw materials,
                                           Ergebnisse     Zielgrößen.
                                                          einer solchenDie
                                                      transportation,          vorliegende
                                                                          within               Studie
                                                                                   the respective
                                                                          Parameteranalyse,            zeigtauf
                                                                                                     research
                                                                                                  bezogen      Methoden
                                                                                                                 fields.     und
                                                                                                                          Above
                                                                                                                  die Zielgröße
                                           Ergebnisse
                  the labour market andMarktmiete.
                                            energy.       einer solchen   Parameteranalyse,
                                                                          all in theberücksichtigt
                                                           Die Datengrundlage                     bezogen
                                                                                      field of real estate   auf  die Zielgröße
                                                                                                            research the lead
                                                                                                       die Wohnungsmärkte
                                           Marktmiete.
                                           Deutschlands    Die
                                                             in Datengrundlage
                                                                Städten abtime       berücksichtigt
                                                                                 is usually
                                                                              70.000         very short
                                                                                         Einwohnern.   die and
                                                                                                           Wohnungsmärkte
                                                                                                                thus scarcely
                                           Deutschlands in Städten ab         70.000
                                                                          allows         Einwohnern.
                                                                                   for any  timely analysis, decision or re-
                  Derive leading indicators from extended                 action on the part of the investor. What would
                  cause-effect chains                                     be interesting is a combination of the respec-
                                                                          tive cause-effect chains which are the subject
                  The studies and indicator systems presented             of research in both fields. Based on the follo-
                  above show two largely independent re-                  wing approach the two research areas are to
                  search areas to date: on the one hand there is          be considered holistically, and interlinked with
                  extensive real estate market-related research,          one another therefore (Fig. 4):

                                      COMPACT CAUSAL CHAINS FROM ORIGINAL RESEARCH FIELDS
                                                     (DEDUCTIVE APPROACH)

             REAL ESTATE RESEARCH			                                                                           ECONOMIC RESEARCH

Real estate value 3Construction costs 3Construction material costs                            Construction material costs   3Commodity prices
Real estate value 3Rent3Purchasing power                                                      Purchasing power 3Income 3Employment level 3Production

                      EXTENDED CAUSAL CHAINS FROM COMBINED ECONOMIC AND MARKET RESEARCH
                                             (DEDUCTIVE APPROACH)

                          Real estate value 3Construction costs 3Construction material costs                     3Commodity prices
                         Real estate value 3Rent 3Purchasing power 3 Income 3Employment level 3Production

                           DIRECT TEST OF CORRELATIONS AND INDICATORS (INDUCTIVE APPROACH)

                                                       Real estate value 3 [???]         3Commodity prices
                                                            Real estate value       3 [???] 3Production

                  Fig. 4: Principle for the ascertainment of leading indicators using an inductive approach.

                                                                                      13
                                                                                       2
                                                                                       2
REAL EXPERTS.
REAL EXPERTS.
REAL VALUES.
REAL VALUES.

Erklärung
Erklärung und
          und Prognose
              Prognose von
                       von Wohnungsmieten
                            Wohnungsmieten ––
Typically there is a correlation between the a direct inference on the real estate market

Bestimmung
Bestimmung wesentlicher
             wesentlicher Einflussfaktoren
economic strength of a location and its real (shortening of the causal chains by “skipping”

                          Einflussfaktoren
estate market. Although the absolute price the general economic model).

mittels
mittels Korrelationsanalyse
levels for rents and purchase prices cannot

        Korrelationsanalyse
be computed directly from income and
purchasing power ratios, because numerous                    Test of various real estate and
location-specific factors such as commuter                   macroeconomic time series
flows, the attractiveness        of   the   city/town,
                          In Zeiten hoher Marktdynamik und steigender Wettbewerbsintensität
and real estate offerings In
                          sindZeiten
                             in the      hoherlikewise
                                      region
                                 leistungsfähige  Marktdynamik       und Analyse
                                                                          steigender
                                                             In an extensive
                                                         Systeme     der             undWettbewerbsintensität
                                                                                 indicator  test various data se-
                                                                                           Entscheidungsunter-
have an effect. Abovesind   all  leistungsfähige
                                the    impact     of  theSysteme
                                                             ries    der
                                                                   are    Analyse
                                                                       compared
                          stützung unverzichtbar. Das Immobilien- und Markt-Research und
                                                                                     using Entscheidungsunter-
                                                                                             correlation analysis.
                                                                                                           arbeitet
regional economic strengthstützung as   unverzichtbar.
                                         an  individual     Das
                                                             For  Immobilien-
                                                                   the  real      und
                                                                              estate
                          dabei insbesondere an den Themen Informationserhebung,       Markt-Research
                                                                                       market    the house arbeitet
                                                                                                               price
                                                                                                              Kenn-
parameter is often strong dabei     insbesondere
                                 enough       to   gene- an  den
                                                             index  Themen
                                                                      (HPI)     Informationserhebung,
                                                                              and    construction
                          zahlenbewertung und Potenzialeinschätzung. Entscheidend ist dabei          costs    Kenn-
                                                                                                              index
                          zahlenbewertung
rate corresponding amendments
                          die Kenntnis invon        und
                                                  supply  Potenzialeinschätzung.
                                                             (CCI) from in
                                                     Einflussfaktoren,     Eurostat
                                                                              Bezugand  Entscheidend
                                                                                       auf the
                                                                                             aufrent indexist(RI)
                                                                                                               dabei
                                                                                                  immobilienwirt- of
and demand in the event   die   Kenntnis
                                  of          von
                                        changes,     Einflussfaktoren,
                                                     and     the   OECD    in
                                                                          for Bezug
                                                                              14       auf
                                                                                  European
                          schaftliche Zielgrößen. Die vorliegende Studie zeigt Methoden und  auf
                                                                                              realimmobilienwirt-
                                                                                                   estate markets
thus affect real estateschaftliche
                            prices andeiner
                          Ergebnisse       Zielgrößen.
                                                     at a Die
                                            rentssolchen     were vorliegende
                                                                    used.
                                                             Parameteranalyse,     Studie  zeigtauf
                                                                                     bezogen       Methoden      und
                                                                                                     die Zielgröße
                          Ergebnisse
location. The interdependencies            einer
                                          can   in solchen
                                                   some      Parameteranalyse,
                                                             The     macroeconomic   bezogen
                          Marktmiete. Die Datengrundlage berücksichtigt die Wohnungsmärkteand    auf die Zielgröße
                                                                                                   socioeconomic
cases only partially beMarktmiete.
                            visible and/or
                          Deutschlands      Die    Datengrundlage
                                               in with   a ab
                                                   Städten   indicators
                                                                 70.000berücksichtigt
                                                                           are  based ondie
                                                                            Einwohnern.        Wohnungsmärkte
                                                                                             various   data series
time lag. Nevertheless,   Deutschlands
                             a trend reversal, in Städten
                                                       for abincl.70.000
                                                                    on GDP  Einwohnern.
                                                                              in real terms, import/export of
example in per capita GDP (an expression of goods, private consumption, unemployment
the economic strength of the location there- rates, number of working hours per person
fore), would also be an important signal for employed, residential construction approvals,
the real estate market.                                      haulage and transportation figures (e.g. con-
A fundamental benefit of the extension of the tainer transhipment), passenger vehicle regis-
real estate market analysis to the upstream                  trations, prices for raw materials and energy
economic and socioeconomic environment is (e.g. coal, diesel, natural gas, aluminium,
that interesting ratios, prognosis systems and iron ore), as well as interest rates. Insofar as
publications are generally available there in possible country-specific series were utilised,
greater numbers, more frequently and earlier                 in all other cases the relevant world market
than for the real estate market in the narrower              prices. The primary sources used were the
sense. Fundamentally the use of economic                     publicly-accessible databases of the OECD,
forecasts or the components therein for the Eurostat and IndexMundi. The underlying
real estate markets has an excellent outlook data were fundamentally available with just a
for success. In detail, leading indicators which few exceptions from the year 2000 onwards.
are already used in these systems are interes- An overview of the tested parameters is
ting. It may be possible to use these to draw shown in Fig. 5.

 INDICATOR                                 COUNTRIES           YEARS              SOURCE

 House price index                         14 of 14            2000-2019          Eurostat
 Construction costs index residenti-
                                           14 of 14            2000-2019          Eurostat
 al building
 Rent index                                14 of 14            2000-2019          OECD
 Construction approvals (apart-
                                           14 of 14            2000-2016          Eurostat
 ments in apartment buildings)
 GDP (chain-linked volume)                 14 of 14            2000-2019          Eurostat
 Industrial production                     14 of 14            2000-2019          OECD
 Working hours per person
                                           14 of 14            2000-2019          OECD
 employed

                                                        14
                                                         2
                                                         2
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