Skip to main content

House Prices since 1870

Katharina Knoll, Moritz Schularick and Thomas Steger have a really nice paper and Vox column looking at house prices for 14 economies from 1870 to 2012. They find that house prices stayed constant from 1870 to circa 1950, but rose strongly in the second half of the twentieth century. They also find that it is increasing land prices, not construction costs, which have driven this increase. Notably, their findings imply that real house price growth has outpaced income growth by a substantial margin.

Strangely, Knoll et al. do not explicitly acknowledge the relationship between the great mortgaging, which Schularick identified in previous work, and this increase in house prices (see previous post on this). For me, this explains a large part of what they find, particularly the large increase from the late 1990s. Instead, they argue that land increasingly became a fixed factor due to a land-augmenting decline in transport costs from circa 1950 onwards. In addition, zoning regulations on land use may have further restricted the supply of land.

Source: http://www.voxeu.org/article/home-prices-1870

Popular posts from this blog

How Valuable Are Connections?

Daron Acemoglu, Simon Johnson, Amir Kermani, James Kwak and Todd Mitton have written a paper on whether firms connected to Timothy Geithner benefited from these connections. They do so by looking at how stocks of these firms reacted to the announcement that he was a nominee for Treasury Secretary in November 2008. They find that there were large abnormal returns for connected firms. Below is the paper's abstract and the full paper is available here . The announcement of Timothy Geithner as nominee for Treasury Secretary in November 2008 produced a cumulative abnormal return for financial firms with which he had a connection. This return was about 6% after the first full day of trading and about 12% after ten trading days. There were subsequently abnormal negative returns for connected firms when news broke that Geithner's confirmation might be derailed by tax issues. Excess returns for connected firms may reflect the perceived impact of relying on the advice of a small ne...

The CEO: The Rise and Fall of Britain's Captains of Industry

Michael Aldous and I had our book The CEO: The Rise and Fall of Britain's Captains of Industry published a few weeks ago. You can find out more about it and buy it at Cambridge University Press's website . It is also available at Amazon , Waterstones , and Barnes & Noble .  The CEO has already been reviewed in The Sunday Times , The Observer and Financial Times .

Boom and Bust: A Global History of Financial Bubbles

Boom and Bust: A Global History of Financial Bubbles, co-authored with my colleague Will Quinn , is forthcoming in August. It is published by Cambridge University Press and is available for pre-order at Amazon , Barnes and Noble , Waterstones and Cambridge University Press .