IDEAS home Printed from https://ideas.repec.org/p/zbw/vfsc15/112848.html
   My bibliography  Save this paper

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

Author

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

Abstract

How have house prices evolved in the long-run? This paper presents, for the first time, annual house prices for 14 advanced economies since 1870. Based on extensive data collection, we show that the past decades have seen a historically unprecedented boom in global house prices. Real house prices in most industrial economies 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, hold the key to understanding the trajectory of house prices in the long-run. Rising land prices explain about 80 percent of the global house price surge since World War II. In the past 30 years alone, land prices in advanced economies approximately doubled in real terms. We also show that gains in the value of land have been the key driver of the increasing wealth-to-income ratios in advanced economies over the past decades.

Suggested Citation

  • Steger, Thomas & Knoll, Katharina & Schularick, Moritz, 2015. "No Price Like Home: Global House Prices, 1870-2012," VfS Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 112848, Verein für Socialpolitik / German Economic Association.
  • Handle: RePEc:zbw:vfsc15:112848
    as

    Download full text from publisher

    File URL: https://www.econstor.eu/bitstream/10419/112848/1/VfS_2015_pid_205.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Thomas Piketty & Gabriel Zucman, 2014. "Capital is Back: Wealth-Income Ratios in Rich Countries 1700–2010," The Quarterly Journal of Economics, Oxford University Press, vol. 129(3), pages 1255-1310.
    2. Òscar Jordà & Moritz Schularick & Alan M. Taylor, 2016. "The great mortgaging: housing finance, crises and business cycles," Economic Policy, CEPR;CES;MSH, vol. 31(85), pages 107-152.
    3. Zheng Liu & Pengfei Wang & Tao Zha, 2013. "Land‐Price Dynamics and Macroeconomic Fluctuations," Econometrica, Econometric Society, vol. 81(3), pages 1147-1184, May.
    4. Silver, Mick, 2014. "The degree and impact of differences in house price index measurement," Journal of Economic and Social Measurement, IOS Press, issue 4, pages 305-328.
    5. Karl E. Case & Robert J. Shiller, 1987. "Prices of single-family homes since 1970: new indexes for four cities," New England Economic Review, Federal Reserve Bank of Boston, issue Sep, pages 45-56.
    6. Del Negro, Marco & Otrok, Christopher, 2007. "99 Luftballons: Monetary policy and the house price boom across U.S. states," Journal of Monetary Economics, Elsevier, vol. 54(7), pages 1962-1985, October.
    7. Edward L. Glaeser & Joshua D. Gottlieb & Kristina Tobio, 2012. "Housing Booms and City Centers," American Economic Review, American Economic Association, vol. 102(3), pages 127-133, May.
    8. Jushan Bai & Pierre Perron, 2003. "Computation and analysis of multiple structural change models," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 18(1), pages 1-22.
    9. Odran Bonnet & Pierre-Henri Bono & Guillaume Chapelle & Etienne Wasmer, 2014. "Does housing capital contribute to inequality? A comment on Thomas Piketty’s Capital in the 21st Century," Sciences Po Economics Discussion Papers 2014-07, Sciences Po Departement of Economics.
    10. Glaeser, Edward L. & Ward, Bryce A., 2009. "The causes and consequences of land use regulation: Evidence from Greater Boston," Journal of Urban Economics, Elsevier, vol. 65(3), pages 265-278, May.
    11. repec:ucp:bkecon:9780226301532 is not listed on IDEAS
    12. Charles Goodhart & Boris Hofmann, 2008. "House prices, money, credit, and the macroeconomy," Oxford Review of Economic Policy, Oxford University Press, vol. 24(1), pages 180-205, spring.
    13. Ethan M. J. Lieber, 2017. "Does It Pay to Know Prices in Health Care?," American Economic Journal: Economic Policy, American Economic Association, vol. 9(1), pages 154-179, February.
    14. Andreas Hornstein, 2009. "Problems for a fundamental theory of house prices," Economic Quarterly, Federal Reserve Bank of Richmond, vol. 95(Win), pages 1-24.
    15. Raymond W. Goldsmith, 1962. "The National Wealth of the United States in the Postwar Period," NBER Books, National Bureau of Economic Research, Inc, number gold62-1, June.
    16. Peter Abelson & Demi Chung, 2005. "The Real Story of Housing Prices in Australia from 1970 to 2003," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 38(3), pages 265-281, September.
    17. Leo Grebler & David M. Blank & Louis Winnick, 1956. "Capital Formation in Residential Real Estate: Trends and Prospects," NBER Books, National Bureau of Economic Research, Inc, number greb56-1, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Luigi Bonatti, 2017. "Land, Housing, Growth and Inequality," DEM Working Papers 2017/01, Department of Economics and Management.
    2. Hideaki Hirata & M. Ayhan Kose & Christopher Otrok & Marco E Terrones, 2013. "Global House Price Fluctuations: Synchronization and Determinants," NBER International Seminar on Macroeconomics, University of Chicago Press, vol. 9(1), pages 119-166.
    3. Cesa-Bianchi, Ambrogio, 2013. "Housing cycles and macroeconomic fluctuations: A global perspective," Journal of International Money and Finance, Elsevier, vol. 37(C), pages 215-238.
    4. Homburg, Stefan, 2017. "A Study in Monetary Macroeconomics," OUP Catalogue, Oxford University Press, number 9780198807537, April.
    5. Sofoklis Vogiazas & Constantinos Alexiou, 2017. "Determinants of Housing Prices and Bubble Detection: Evidence from Seven Advanced Economies," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 45(1), pages 119-131, March.
    6. Òscar Jordà & Katharina Knoll & Dmitry Kuvshinov & Moritz Schularick & Alan M Taylor, 2019. "The Rate of Return on Everything, 1870–2015," The Quarterly Journal of Economics, Oxford University Press, vol. 134(3), pages 1225-1298.
    7. Daniel Waldenström, 2021. "Wealth and History: An Update," CESifo Working Paper Series 9366, CESifo.
    8. Punzi, Maria Teresa, 2016. "Financial cycles and co-movements between the real economy, finance and asset price dynamics in large-scale crises," FinMaP-Working Papers 61, Collaborative EU Project FinMaP - Financial Distortions and Macroeconomic Performance: Expectations, Constraints and Interaction of Agents.
    9. Volker Grossmann & Thomas Steger, 2016. "Das House-Kapital: A Theory of Wealth-to-Income Ratios," CESifo Working Paper Series 5844, CESifo.
    10. Waldenström, Daniel, 2015. "Wealth-income ratios in a small, late-industrializing, welfare-state economy: Sweden, 1810–2014," Working Paper Series, Center for Fiscal Studies 2015:6, Uppsala University, Department of Economics.
    11. Stijn Claessens & M Ayhan Kose, 2018. "Frontiers of macrofinancial linkages," BIS Papers, Bank for International Settlements, number 95, May.
    12. Waldenström, Daniel, 2021. "Wealth and History: An Update," Working Paper Series 1411, Research Institute of Industrial Economics.
    13. Grossmann, Volker & Larin, Benjamin & Löfflad, Hans Torben & Steger, Thomas, 2021. "Distributional consequences of surging housing rents," Journal of Economic Theory, Elsevier, vol. 196(C).
    14. Christophe Blot & Paul Hubert & Fabien Labondance, 2017. "Does monetary policy generate asset price bubbles ?," Documents de Travail de l'OFCE 2017-05, Observatoire Francais des Conjonctures Economiques (OFCE).
    15. Jordà, Òscar & Schularick, Moritz & Taylor, Alan M., 2015. "Leveraged bubbles," Journal of Monetary Economics, Elsevier, vol. 76(S), pages 1-20.
    16. Nobuhiro Kiyotaki & Alexander Michaelides & Kalin Nikolov, 2011. "Winners and Losers in Housing Markets," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 43, pages 255-296, March.
    17. Gianni La Cava, 2016. "Housing prices, mortgage interest rates and the rising share of capital income in the United States," BIS Working Papers 572, Bank for International Settlements.
    18. Jean-Luc Gaffard, 2015. "Capital, richesse et croissance. De la recherche empirique aux éclairages théoriques," Revue de l'OFCE, Presses de Sciences-Po, vol. 0(1), pages 57-82.
    19. Huub Ploegmakers & Pascal Beckers & Erwin Van der Krabben, 2018. "The impact of planning intervention on business development: Evidence from the Netherlands," Urban Studies, Urban Studies Journal Limited, vol. 55(14), pages 3252-3273, November.
    20. Loukas Karabarbounis & Brent Neiman, 2014. "Capital Depreciation and Labor Shares Around the World: Measurement and Implications," NBER Working Papers 20606, National Bureau of Economic Research, Inc.

    More about this item

    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

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:zbw:vfsc15:112848. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://edirc.repec.org/data/vfsocea.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ZBW - Leibniz Information Centre for Economics (email available below). General contact details of provider: https://edirc.repec.org/data/vfsocea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.