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No Price Like Home: Global House Prices, 1870-2012

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  • Knoll, Katharina
  • Schularick, Moritz
  • Steger, Thomas

Abstract

How have house prices evolved in the long-run? This paper presents annual house price indices for 14 advanced economies since 1870. Based on extensive data collection, we are able to show for the first time that house prices in most industrial economies stayed constant in real terms from the 19th to the mid-20th century, but rose sharply in recent decades. Land prices, not construction costs, hold the key to understanding the trajectory of house prices in the long-run. Residential land prices have surged in the second half of the 20th century, but did not increase meaningfully before. We argue that before World War II dramatic reductions in transport costs expanded the supply of land and suppressed land prices. Since the mid-20th century, comparably large land-augmenting reductions in transport costs no longer occurred. Increased regulations on land use further inhibited the utilization of additional land, while rising expenditure shares for housing services increased demand.

Suggested Citation

  • Knoll, Katharina & Schularick, Moritz & Steger, Thomas, 2014. "No Price Like Home: Global House Prices, 1870-2012," CEPR Discussion Papers 10166, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:10166
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    References listed on IDEAS

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    More about this item

    Keywords

    house prices; land prices; neoclassical theory; transportation costs;
    All these keywords.

    JEL classification:

    • N10 - Economic History - - Macroeconomics and Monetary Economics; Industrial Structure; Growth; Fluctuations - - - General, International, or Comparative
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • R30 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - General
    • R40 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - General

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