Based on various 'city indices' that reflect the relative attractiveness of the capitals as a place to live, to visit and to do business, we construct a measure of over- or undervaluation of the price of a typical inner-city apartment. In this research report we offer an original but tentative perspective on the valuation of property prices in the 28 EU capital cities (we still include London). A close monitoring of housing markets at the city level is warranted, as there may be important spillover effects of price dynamics to the rest of the country. As a result, prices in some cities are now about twice or even three times as high as the average country price level. This was driven by particular factors such as the role played by (foreign) investors. From anecdotal evidence, we know that property prices in many large European cities have risen sharply and at a faster pace than the respective country aggregates over the past years.
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