Urbanization and Housing Prices in OECD Countries : 1870 to 2016

We examine relationship between urbanization and real house prices for a panel of OECD countries using a long historical data that covers the period 1870 to 2016. We use parametric and non-parametric panel data models that estimate the impulse responses and the time-varying coefficients. Our parametric estimates show that an increase in the rate of urbanization has a significant positive effect on real house prices, while the non-parametric estimates show that the relationship between urbanization and real house prices is time-varying. We find that mortgage to GDP ratio is a channel through which urbanization contributes to higher house prices