Cultural similarities and housing market linkage: evidence from OECD countries

Abstract

The subprime crisis provoked a growing study on international housing market linkage. Nevertheless, the extant literature fails to explore housing price co-movements in terms of culture and a country’s responses (e.g. housing market conditions and government participation). Employing the databases on cultural similarities, housing market conditions and government participation in 18 OECD countries over 1970–2016, this article suggests that culture similarities affect house price co-movements via information dissemination efficiency and investment conduct consistency. In addition, housing supply elasticity and government participation are able to mitigate house price contagion. Hence, to withstand external shocks, countries should pay attention to the role of cultural similarities in housing price interdependence. Moreover, it is necessary to ensure that housing supply is resilient and improve government participation.