DP10166 No Price Like Home: Global House Prices, 1870-2012
|Author(s):||Katharina Knoll, Moritz Schularick, Thomas Steger|
|Publication Date:||September 2014|
|Keyword(s):||house prices, land prices, neoclassical theory, transportation costs|
|JEL(s):||N10, O10, R30, R40|
|Programme Areas:||International Macroeconomics, Economic History|
|Link to this Page:||www.cepr.org/active/publications/discussion_papers/dp.php?dpno=10166|
How have house prices evolved over the long-run? This paper presents annual house prices for 14 advanced economies since 1870. Based on extensive data collection, we show that real house prices stayed constant from the 19th to the mid-20th century, but rose strongly during the second half of the 20th century. Land prices, not replacement costs, are the key to understanding the trajectory of house prices. Rising land prices explain about 80 percent of the global house price boom that has taken place since World War II. Higher land values have pushed up wealth-to-income ratios in recent decades.