Housing price convergence: new evidence from Indian cities

Abstract

PurposeThe main purpose of this paper is to examine the convergence hypothesis of House Price Index (HPI) in the case of 18 major Indian cities for the period 2014–2019.Design/methodology/approachTo attain the authors main goal, this study applies a clustering algorithm advanced by Phillips and Sul. This test creates a club of convergence based on the growth of the cities in terms of HPI.Findings The study findings show the existence of two convergence clubs and one non-convergent group. Club 1 includes the cities with high HPI growth, whereas club 2 comprises of cities with least HPI growth. Cities belonging to the non-convergent group are neither converging nor diverging.Practical implicationsThis study findings will benefit home buyers, sellers, investors, regulators and policymakers interested in the dynamic interlinkages of house price (HP) among Indian cities.Originality/valueThe majority of the studies are conducted in the case of China at the province or city levels. Furthermore, in the case of India, none of the studies has investigated the HP club convergence across Indian cities. Therefore, the present study fills this research gap by examining the HP club convergence across Indian cities.