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Modelling the housing market in Luxembourg
27-05-2020 | STATEC

A system of equations is identified which allows to capture the most important developments in the housing market in Luxembourg. The econometric set-up takes explicitly into account demand and supply aspects and the trade-off between renting and buying alike. Key supply factors considered comprise land supply, construction activity and the residential capital stock. Demand factors involve, among others, effective demand captured by the average number of households and latent demand proxied by the number of cross-border workers. The extended model allows for an analysis of the developments in the housing market in Luxembourg from a macroeconomic point of view taking into account various feedback effects from other sectors. It can then be used for structural analysis, policy analysis and macroeconomic forecasting alike.