N°25-09: Housing Prices, Wars, and Epidemics over Six Centuries

This paper examines long-run housing market dynamics in Stockholm from 1420 to 2021, with a focus on affordability stress. We combine housing cycle detection with a price-to-income measure of affordability strain and identify 13 cycles marked by affordability stress. We then relate these episodes to wars and epidemics through a descriptive analysis of their severity, timing, and initial channel of deterioration. This comparison shows that cycles overlapping with wars tend to reach lower price peaks and experience larger post-peak corrections than those during normal times. It also shows that affordability stress during wars more often emerges through income compression than price acceleration. More broadly, event onsets are more likely to coincide with the emergence of affordability stress than with the start of price corrections. By providing a six-century perspective, the paper offers historical context for current debates on housing market stability.