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House Price Convergence: Evidence from India
[Convergence des prix des logements : le cas indien]

Author

Listed:
  • Rajesh Raj
  • Rath D.P.

Abstract

The “club convergence” of sub-national house prices has so far been studied in respect of a number of advanced economies and emerging markets, but not for India. As such, this study contributes to this gap in literature by analyzing long-run convergence of regional house prices for a major emerging market. This study finds that city house prices in India do not converge to a single steady state, rather they form at least three clusters and converge to their respective steady state paths. The house prices are found to display conditional convergence driven by several factors, which inter alia include initial price levels, mortgage loans, and population density. The outcome of this study could be useful for policy makers in designing cluster-specific policy measures. It could also be useful for real estate fund managers, in achieving better fund diversification strategies, and the mortgage market forecasters, in reduced forecasting and modelling efforts. La convergence à long terme des prix des logements infranationaux a été étudiée jusqu'à présent pour un certain nombre d'économies avancées et de pays émergents, mais pas pour l'Inde. Cette étude contribue à combler cette lacune de la littérature en analysant la convergence à long terme des prix de l’immobilier régionaux pour un marché émergent majeur. Cette étude montre que les prix des logements dans les villes indiennes ne convergent pas vers un état stable unique, mais qu'ils forment plutôt au moins trois groupes et convergent vers leurs états stables respectifs. Les prix de l’immobilier affichent une convergence conditionnelle déterminée par plusieurs facteurs, notamment les niveaux de prix initiaux, les prêts hypothécaires et la densité de population. Les résultats de cette étude pourraient être utiles aux décideurs politiques pour concevoir des mesures politiques spécifiques aux clusters. Ils pourraient également être utiles aux gestionnaires de fonds immobiliers, pour mettre en place de meilleures stratégies de diversification des fonds, et aux prévisionnistes du marché hypothécaire, pour réduire les efforts de prévision et de modélisation.

Suggested Citation

  • Rajesh Raj & Rath D.P., 2022. "House Price Convergence: Evidence from India [Convergence des prix des logements : le cas indien]," Working papers 893, Banque de France.
    • Handle: RePEc:bfr:banfra:893
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    References listed on IDEAS

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    More about this item

    Keywords

    House Prices; Mortgage Market; Loans; Convergence; Club; Sub-National; India;
    All these keywords.

    JEL classification:

    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand

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