A q Model of House Prices

Jakob Madsen

No 03-11, Monash Economics Working Papers from Monash University, Department of Economics

Abstract: This paper develops a Tobin’s q model of house prices which shows that changes in interest rates, demography, and income are likely to have only temporary effects on house prices while house prices in the long run are determined by prices of developed land, value added taxes, stamp duties, and construction costs. Empirical estimates show that agricultural land prices are a proxy for urban land prices, which, together with construction costs are the key determinants of house prices in the long run.

Keywords: housing market; Tobin’s q; construction costs; land prices (search for similar items in EconPapers)
JEL-codes: E13 E22 G12 (search for similar items in EconPapers)
Pages: 28 pages
Date: 2011-06
New Economics Papers: this item is included in nep-agr and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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