An Empirical Analysis of Real Estate Cycles in the Lithuanian Housing Market

Abstract

In this paper, we analyze real estate cycles in the Lithuanian housing market. The literature has shown that in the context of the Lithuanian real estate examination, researchers employed mostly a formal turning point analysis or descriptive statistics to examine the cyclical nature of the Lithuanian housing market. An econometric assessment of the national real estate market is therefore called-in. We employed the Hodrick-Prescott filter to de-trend selected series. The findings indicate that Lithuanian house prices follow a three-year cycle. These results are however time-dependent, whereas fluctuations in the Lithuanian housing market vary. Our insights into the cyclical activity in the national housing market can be usefully employed by real estate market participants.