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The economic implications of house price capitalization: a synthesis

Hilber, Christian A. L. (2017) The economic implications of house price capitalization: a synthesis. Real Estate Economics, 45 (2). pp. 301-339. ISSN 1080-8620

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Identification Number: 10.1111/1540-6229.12129

Abstract

In this article I argue that the extent to which fiscal variables are capitalized into house prices has important economic implications. I synthesize an emerging literature that explores the conditions under which public and private investments and intergovernmental transfers are capitalized into local house prices and the broader implications of such capitalization. The main insights are: (i) House price capitalization is more pronounced in locations with strict regulatory and geographical supply constraints; (ii) capitalization can – under certain conditions – induce the provision of durable local public goods and club goods; and (iii) capitalization effects – which are habitually ignored by policy makers – have important adverse consequences for a wide range of policies such as intergovernmental aid or the mortgage interest deduction.

Item Type: Article
Official URL: https://www.areuea.org/publications/ree/
Additional Information: © 2015 American Real Estate and Urban Economics Association
Divisions: Geography & Environment
Spatial Economics Research Centre
Subjects: H Social Sciences > HD Industries. Land use. Labor
H Social Sciences > HN Social history and conditions. Social problems. Social reform
H Social Sciences > HT Communities. Classes. Races
JEL classification: D - Microeconomics > D7 - Analysis of Collective Decision-Making > D71 - Social Choice; Clubs; Committees; Associations
R - Urban, Rural, and Regional Economics > R2 - Household Analysis > R21 - Housing Demand
R - Urban, Rural, and Regional Economics > R3 - Production Analysis and Firm Location > R31 - Housing Supply and Markets
Sets: Departments > Geography and Environment
Research centres and groups > Spatial Economics Research Centre
Date Deposited: 28 May 2015 09:12
Last Modified: 20 Feb 2019 11:55
Funders: Lincoln Institute of Land Policy
URI: http://eprints.lse.ac.uk/id/eprint/62118

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