Data and Code for: Interest rates and the spatial polarization of housing markets

Rising within-country differences in house values are a much debated trend in<br>the U.S. and internationally. Using new long-run regional data for 15 advanced<br>economies, we first show that standard explanations linking growing price dispersion<br>to rent dispersion are contradicted by an important stylized fact: rent dispersion<br>has increased far less than price dispersion. We then propose a new explanation: a<br>uniform decline in real risk-free interest rates can have heterogeneous spatial effects<br>on house values. Falling real safe rates disproportionately push up prices in large<br>agglomerations where initial rent-price ratios are low, leading to housing market<br>polarization on the national level.