Long-Run Movements in House Prices

Svein Olav Krakstad ()
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Svein Olav Krakstad: University of Stavanger

International Real Estate Review, 2015, vol. 18, issue 4, 429-454

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.

Keywords: House Prices; Rents; Construction Costs; Wages; VECM; Cointegration (search for similar items in EconPapers)
JEL-codes: L85 (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (1)

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