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Are Taxes Drivers of House Prices? : Cross-Country Evidence from (Advanced) Economies in APEC

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Abstract

This paper investigates the determinants of house prices in APEC countries. We focus our analysis on the role of property related taxes as well as other important macroeconomic variables. Tax is one of direct tools of government for influencing housing market. Therefore, analyzing how these taxes affect house prices provides direct policy implications. Our result suggests that the property tax is negatively associated, while the acquisition tax is positively related with the house prices. In shaping this outcome, the force from demand side as well as that from supply side are working at the same time. A higher tax usually increases costs of acquiring and maintaining houses which exerts upward pressures on house prices. On the other hand, a higher tax suppresses demand for houses because less people purchase houses as the costs increase. These two opposing forces interact with each other to yield qualitatively different results regarding the acquisition and property tax.

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  • Yoon, Yeo Joon & Lee , Woong, 2022. "Are Taxes Drivers of House Prices? : Cross-Country Evidence from (Advanced) Economies in APEC," APEC Study Series 22-1, Korea Institute for International Economic Policy.
    • Handle: RePEc:ris:kiepas:2022_001
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    More about this item

    Keywords

    house prices; real estate taxes; APEC;
    All these keywords.

    JEL classification:

    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • R30 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - General

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