Yujiang River Chen, Coen Teulings

VOXEU column,16 Dec 2025 Link to column

House prices have increased sharply in many advanced economies, often leading to populist revolt and social crises. This column argues that agglomeration externalities foster urbanisation and knowledge spillovers, which generate high location premiums and can account for the increase in house prices. Policies to address the lack of affordable housing include building smaller houses in cities, providing efficient public rail transport for commuting, and pricing parking for residents in cities appropriately.

https://cepr.org/voxeu/columns/house-prices-big-cities-cannot-be-expected-come-down-any-time-soon