The economic implications of house price capitalization: a synthesis

Christian Hilber

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: In this article I argue that the extent to which fiscal variables are capitalized into house prices has important economic implications. I synthesize an emerging literature that explores the conditions under which public and private investments and intergovernmental transfers are capitalized into local house prices and the broader implications of such capitalization. The main insights are: (i) House price capitalization is more pronounced in locations with strict regulatory and geographical supply constraints; (ii) capitalization can – under certain conditions – induce the provision of durable local public goods and club goods; and (iii) capitalization effects – which are habitually ignored by policy makers – have important adverse consequences for a wide range of policies such as intergovernmental aid or the mortgage interest deduction.

Keywords: House price capitalization; homeownership; local public goods; club goods; land use regulation; land and housing supply; incentives to invest; redistribution (search for similar items in EconPapers)
JEL-codes: D71 R21 R31 (search for similar items in EconPapers)
Date: 2017-05-01
New Economics Papers: this item is included in nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (25)

Published in Real Estate Economics, 1, May, 2017, 45(2), pp. 301-339. ISSN: 1080-8620

Downloads: (external link)
http://eprints.lse.ac.uk/62118/ Open access version. (application/pdf)

Related works:
Journal Article: The Economic Implications of House Price Capitalization: A Synthesis (2017)
Working Paper: The economic implications of house price capitalization: a synthesis (2015)
Working Paper: The Economics Implications of House Price Capitalization: A Synthesis (2011)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:62118

Access Statistics for this paper

More papers in LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library LSE Library Portugal Street London, WC2A 2HD, U.K.. Contact information at EDIRC.
Bibliographic data for series maintained by LSERO Manager ().