How Important are Land Values in House Price Growth? Evidence from Canadian Cities

Kenneth Stewart

No 2004, Department Discussion Papers from Department of Economics, University of Victoria

Abstract: A Cobb-Douglas growth accounting framework is used to study the contributions of structures and land to newly-constructed home prices across major Canadian cities. The data set is unusual in that land prices are directly observed rather than having to be imputed, and quality change is carefully controlled for in the measurement of structures. These data permit testing of constant returns to scale, which in conventional applications must be adopted as a maintained hypothesis, as well as the introduction of dynamic effects. Whereas standard analyses and land costs to be the dominant contributor to the growth in housing costs, I find that this varies greatly by city. Yet, despite this novel empirical result, the evidence supports other recent work that endorses the constant-returns Cobb Douglas methodological framework.

Keywords: Land; Land value; Land prices; Residential construction costs (search for similar items in EconPapers)
Pages: 26 pages
Date: 2021-04-19
New Economics Papers: this item is included in nep-ure
Note: ISSN 1914-2838 JEL Classifications: R31, R32
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Related works:
Journal Article: How important are land values in house price growth? Evidence from Canadian cities (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:vic:vicddp:2004

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