The purpose of this paper is to identify the sources of intercity house price differentials in Canada. The results indicate that demand factors are important explanatory variables; a 1% increase in the income of households raises house prices by 1.11%; higher rates of anticipated inflation result in higher house prices as households increase their demand for real assets such as housing during inflationary periods; and finally, the fraction of households that are non‐family households is positively associated with house prices. These results are in agreement with those of other countries.
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Fortura et al. (1986) studied this question.
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