Do urban house prices converge?

Wood, G, Sommervoll, D and De Silva, A 2016, 'Do urban house prices converge?', Urban Policy and Research, vol. 34, no. 2, pp. 102-115.


Document type: Journal Article
Collection: Journal Articles

Title Do urban house prices converge?
Author(s) Wood, G
Sommervoll, D
De Silva, A
Year 2016
Journal name Urban Policy and Research
Volume number 34
Issue number 2
Start page 102
End page 115
Total pages 14
Publisher Routledge
Abstract We investigate two aspects of housing market price dynamics. Firstly, whether the spatial pattern of house prices in a metropolitan housing market converge or diverge over time and secondly, whether suburbs with relatively low (high) house prices 20 years ago continue to occupy the same relative position in the house price distribution. The empirical work uses a property transaction database for Melbourne to examine the changing distribution of suburban house prices over a nearly 20-year period (1990-2009) that spans two housing cycles. We focus on convergence measures that use Melbourne submarket-based repeat sale house price indexes as a unit of measurement. We find that house prices diverge, and so the gap between low-priced submarkets and high-priced submarkets is increasing. A second key result is that low-priced submarkets typically remain at the low end of the house price distribution, because their rates of appreciation fall short of those at the upper end of the house price distribution. The geography of house price dynamics suggests that the price gradient with respect to distance from the central business district is becoming steeper.
Subject Urban and Regional Economics
Keyword(s) House price convergence
Repeat sale house price indexes
DOI - identifier 10.1080/08111146.2015.1047492
Copyright notice © 2015 Editorial Board, Urban Policy and Research
ISSN 0811-1146
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