Is There Long-run Convergence among Regional House Prices in the UK?

Mark Holmes () and Arthur Grimes

Urban Studies, 2008, vol. 45, issue 8, 1531-1544

Abstract: This paper investigates the long-run convergence of regional house prices in the UK. Existing studies have failed to reach a consensus on whether or not regional house prices exhibit long-run convergence with each other. The application is proposed of a new test involving unit root testing of the first principal component based on regional—national house price differentials. Using mix-adjusted quarterly data for 1973—2006, it is found that the first principal component is stationary. This suggests that all UK regional house prices are driven by a single common stochastic trend. Further analysis suggests that those regions that are more distant from London exhibit the highest degrees of persistence with respect to deviations in house price differentials.

Date: 2008
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Persistent link: https://EconPapers.repec.org/RePEc:sae:urbstu:v:45:y:2008:i:8:p:1531-1544

DOI: 10.1177/0042098008091489

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