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

146 Pages Posted: 22 Oct 2014

See all articles by Katharina Knoll

Katharina Knoll

Free University of Berlin (FUB) - Division of Economics

Moritz Schularick

University of Bonn - Department of Economics; Centre for Economic Policy Research (CEPR)

Thomas Michael Steger

University of Leipzig/Institute for Theoretical Economics/Macroeconomics; CESifo (Center for Economic Studies and Ifo Institute)

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Date Written: April 2015

Abstract

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.

Keywords: house prices, land prices, transportation costs, neoclassical theory

JEL Classification: N10, O10, R30, R40

Suggested Citation

Knoll, Katharina and Schularick, Moritz and Steger, Thomas Michael, No Price Like Home: Global House Prices, 1870-2012 (April 2015). CESifo Working Paper Series No. 5006. Available at SSRN: https://ssrn.com/abstract=2512724

Katharina Knoll

Free University of Berlin (FUB) - Division of Economics ( email )

Boltzmannstr. 20
Berlin 14195, 14195
GERMANY

Moritz Schularick (Contact Author)

University of Bonn - Department of Economics ( email )

Bonn
Germany

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Thomas Michael Steger

University of Leipzig/Institute for Theoretical Economics/Macroeconomics ( email )

Grimmaische Str. 12
D-04109 Leipzig
Germany

CESifo (Center for Economic Studies and Ifo Institute) ( email )

Poschinger Str. 5
Munich, DE-81679
Germany

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