Macroeconomic Drivers of House Price Cycles in the EU: Are They Synchronized Across Member States?

This paper examines the drivers of house price cycles across EU countries between 2005 and 2024 and measures their synchronicity. We used panel data methods—fixed effects, dynamic panel models (Arellano–Bond GMM), and a pooled VAR framework—to capture static and dynamic relationships between house price growth and key macroeconomic variables. The results show that the dynamics of house prices are highly persistent. GDP growth has a clear positive effect, while higher unemployment and interest rates push prices down. Migration flows, however, are not statistically significant at the EU aggregate level. Property taxation shows a positive coefficient, which probably reflects structural and institutional differences rather than a direct dampening effect on prices. Dynamic analysis suggests that macroeconomic shocks have persistent and economically meaningful impacts on house price growth. Hierarchical cluster analysis revealed three distinct groups of countries, meaning that house price cycles are only partially synchronized across the EU. Unlike previous studies that typically examine individual determinants or synchronization separately, this study integrates panel econometric methods, dynamic VAR analysis, and hierarchical clustering within a unified framework to jointly assess macroeconomic drivers, dynamic interactions, and structural heterogeneity of house price cycles across EU countries. In general, common macroeconomic drivers and structural heterogeneity coexist—this is important for the stability of the housing market and sustainable development.