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.