On the Price Gap between Single Family Houses and Apartments

We provide a first decomposition of the price gap between prices for single family houses and apartments into their microeconomic determinants. Using individual data from the collection of real estate transactions data for Berlin, Germany, we find a positive price gap for houses in Berlin in 1990 which is decreasing up to 1998. When controlling for structural characteristics, no positive price gap can be identified between 1996 and 2006. The application of Oaxaca decomposition reveals a growing preference for size (favoring houses), which is – since 2006 - offset by a growing preference for a more central location.