Štefan Rychtárik, National Bank of Slovakia, Slovak Republic
Pavol Latta, National Bank of Slovakia, Faculty of Mathematics, Physics and Informatics, Comenius University in Bratislava, Slovak Republic

Pages: 3 – 17

Abstract

In order to understand the economic and financial development in Slovakia it is crucial to deepen the knowledge on the housing market. Finding real-estate price equilibrium is of high importance in this context. In this paper, we propose an indicator of real-estate price equilibrium that is based on macroeconomic fundaments, mainly disposable income, interest rates and labor market. It is calibrated via convex minimization of the deviations in the relation between debt capacity and housing prices through changes on the labor market. We interpret residual deviations as undervaluation and overvaluation of the housing prices considering macroeconomic fundaments.