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Long-Run Movements in House Prices

Author

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  • Svein Olav Krakstad

    (University of Stavanger)

Abstract

This study analyzes the housing market by using four key ratios: price-rent, price-building cost, price-land cost and price-wage. We attempt to determine how they work together in order to explain the housing market. A unique dataset from Norway is used to investigate the long-run movements of the variables. In order to analyze these, we have created Norwegian hedonic indices for building and land costs. The cointegration tests confirm that there are long-term relationships between these ratios. The results show that these ratios affect future movement in house prices, rents, and building and land costs. Wages are weakly exogenous in the system and therefore drive house prices, rents, and building and land costs in the long run.

Suggested Citation

  • Svein Olav Krakstad, 2015. "Long-Run Movements in House Prices," International Real Estate Review, Global Social Science Institute, vol. 18(4), pages 429-454.
    • Handle: RePEc:ire:issued:v:18:n:04:2015:p:429-454
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    References listed on IDEAS

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    Cited by:

    1. Brian Micallef & Nathaniel Debono, 2020. "The rental sector and the housing block in STREAM," CBM Working Papers WP/03/2020, Central Bank of Malta.

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    More about this item

    Keywords

    House Prices; Rents; Construction Costs; Wages; VECM; Cointegration;
    All these keywords.

    JEL classification:

    • L85 - Industrial Organization - - Industry Studies: Services - - - Real Estate Services

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