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

How have house prices evolved over the long run? This paper presents annual house prices for 14 advanced economies since 1870. We show that real house prices stayed constant from the nineteenth to the mid-twentieth century, but rose strongly and with substantial cross-country variation in the second...

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Bibliographic Details
Published inThe American economic review Vol. 107; no. 2; pp. 331 - 353
Main Authors Knoll, Katharina, Schularick, Moritz, Steger, Thomas
Format Journal Article
LanguageEnglish
Published Nashville American Economic Association 01.02.2017
Subjects
19th century
20th century
21st century
Agricultural prices
Average prices
Construction costs
Decomposition
Dwellings
Economic growth
Economic models
Economics
Historical analysis
Houses
Housing
Housing needs
Housing prices
International
Land economics
Macroeconomics
Price elasticity
Price indices
Prices
Ratios
Studies
Trends
World War II
World wars
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Summary:How have house prices evolved over the long run? This paper presents annual house prices for 14 advanced economies since 1870. We show that real house prices stayed constant from the nineteenth to the mid-twentieth century, but rose strongly and with substantial cross-country variation in the second half of the twentieth 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. Our findings have implications for the evolution of wealth-to-income ratios, the growth effects of agglomeration, and the price elasticity of housing supply.
Bibliography:ObjectType-Article-1
SourceType-Scholarly Journals-1
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ISSN:0002-8282
1944-7981
DOI:10.1257/aer.20150501