Metropolitan house prices in India : do they converge?

Abstract

The paper examines the long-run behavior of house prices by addressing the issue of price convergence or divergence across fifteen metropolitan cities in India. Using available city-level quarterly data covering the period 2007-2011 and applying the Im, Pesaran and Shin (2003) panel unit root test, it is found that relative price levels among various metropolitan cities in India do not converge. This implies that the Law of One Price does not hold in the Indian housing market, hence the different metropolitan house markets operate independent to one another.