This study investigates the causal relationship between the housing returns (HR) and economic policy uncertainty (EPU) in Germany in the real estate market. We assess the stability of parameters of the estimated vector autoregressive models and find that the short-run relationship between HR and EPU is unstable. As a result, a time-varying (bootstrap) rolling window approach is utilized to revisit the dynamic causal link, and we find that EPU has no impact on HR due to the stability of the real estate market in Germany. HR does not have significant effects on EPU in most time periods, however, significant feedback in several sub-periods (both positive and negative) are found from HR to EPU, which indicates that the causal link from HR to EPU varies over time. The empirical results do not support the general equilibrium model of government policy choices that indicate that EPU does not play a role in the real estate market in Germany. This conclusion further confirms the stability of the real estate market in Germany due to its social welfare nature and rational institutional arrangement, as well as the government�s reasonable response measures when negative external shocks occur.

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