Measuring house prices in the long run: Insights from Dublin, 1900-2015

Despite the importance of housing in macroeconomic fluctuations, underscored by the Great Recession, there remains a dearth of information about housing markets prior to the 1980s, thus depriving social scientists of a wealth of case studies from which to draw insights. This paper constructs for the first time a housing price index for Dublin stretching back to 1900. Principal contributions of the paper include the assembly of a micro-level dataset of transactions 1900-1949, using a sample of 66 Dublin streets, and a dataset of newspaper listings from 1949 until modern data series begin. Hedonic price indices are constructed for both datasets, which are then combined with indices covering more recent periods. The nominal price index suggests a steady fall in housing prices early in the twentieth century, undone with post-war inflation, before two decades of volatility but no obvious trend. Rapid housing price inflation started in the 1940s and was an almost ever-present feature thereafter, with the exception of the 1950s and the post-2007 period. Much of the 400-fold increase in nominal housing prices in this period, however, can be attributed to changes in the general price level, which rose by a factor of roughly 100 during the same period. Real housing prices in the mid-2010s were about 3.5 times their 1900 level. The only decades to witness significant increases in real housing prices were the 1920s, the 1940s, the 1960s and Celtic Tiger period (1990s-2007). The indices outlined here provide the basis for a more detailed study of the relationship between housing prices and their determinants, including inflation, incomes, supply, user cost and credit conditions.