Contents

House Rent - Price Ratios : An International Comparison

Peter Chinloy / Cho, Man / Inho Song

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Abstract

Tenants have liquidity constraints that limit volatility in nominal rents, leading houses to become bond-like. The incidence of shocks on rental yields is near zero. For 1980–2014 in Germany and Japan, houses are bond-like, with tenants bearing less than 5% of asset-price shocks. In the United States and United Kingdom, houses are inflation-linked bonds earning real yields of 4%, with tenants bearing 20% of shocks. In Korea, a capital market leads tenants to bear all price shocks. Only there is the rental yield perfectly negatively correlated with capital gains, a requirement for the user cost of housing.

Issue Date
2018
Publisher
The American Real Estate Society
Keywords
bonds; international assets; inflation indexing; housing; mortgage rates
Citation
Journal of Real Estate Research, v.40, no.3, pp.347 - 374, 2018
URL
https://aresjournals.org/doi/abs/10.5555/0896-5803.40.3.347
Journal Title
Journal of Real Estate Research
Start Page
347
End Page
374
Language
English
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