Investigating the Convergence of Housing Prices in Provincial centers of Iran: Relative Convergence Approach

The past and present connections of the housing sector cause the recession (boom) of this sector to be effective in the recession (boom) of the whole economy and housing to act as the engine of the economy. The purpose of this study is to investigate the convergence of housing prices in the provincial of the country. In the present study, the semi-annual data of prices in period 2012:1-2020-2 have been used and for the test, a model based on time-dependent nonlinear log (t) regression has been used. The estimation results based on the approach of Phillips and Sul (2007) show that none of the four cities of Tehran, Isfahan, Ilam and Yasuj show convergence behavior in housing prices. However, for the rest, the result of log (t) test was positive and significant, which indicates the existence of price convergence among the members of each club.Finally, results showed that the average transition path of clubs from one period towards has diverged from the equilibrium. This indicates that as this divergence intensifies, it will become more difficult in practice to make policies to manage market fluctuations. Because it is necessary to adopt a policy specific to each club according to the conditions.