Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/278261 
Year of Publication: 
2022
Series/Report no.: 
ECONtribute Discussion Paper No. 212
Publisher: 
University of Bonn and University of Cologne, Reinhard Selten Institute (RSI), Bonn and Cologne
Abstract: 
Rising within-country differences in house values are a much debated trend in the U.S. and internationally. Using new long-run regional data for 15 advanced economies, we first show that standard explanations linking growing price dispersion to rent dispersion are contradicted by an important stylized fact: rent dispersion has increased far less than price dispersion. We then propose a new explanation: a uniform decline in real risk-free interest rates can have heterogeneous spatial effects on house values. Falling real safe rates disproportionately push up prices in large agglomerations where initial rent-price ratios are low, leading to housing market polarization on the national level.
Subjects: 
House prices
regional housing markets
spatial polarization
JEL: 
G10
G12
G51
R30
Document Type: 
Working Paper

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