House Prices and Rents: Micro Evidence from a Matched Dataset in Central London
AbstractUsing the proprietary dataset of a real estate agency, I analyse tens of thousands of housing sale and rental transactions in Central London during the 2005-2011 period. I run hedonic regressions on both prices and rents and show that price-rent ratios are higher for bigger and more central units. Since this result could be driven by differences in unobserved characteristics between properties for sale and properties for rent, I replicate my analysis using only units that were both sold and rented out within 6 months, and get similar results. I discuss several possible explanations for my findings.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Spatial Economics Research Centre, LSE in its series SERC Discussion Papers with number 0127.
Date of creation: Feb 2013
Date of revision:
Contact details of provider:
Web page: http://www.spatialeconomics.ac.uk/SERC/publications/default.asp
House prices; housing rents; price index;
Find related papers by JEL classification:
- G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
- R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
- R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets
This paper has been announced in the following NEP Reports:
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Veronica Guerrieri & Daniel Hartley & Erik Hurst, 2010.
"Endogenous Gentrification and Housing Price Dynamics,"
NBER Working Papers
16237, National Bureau of Economic Research, Inc.
- Guerrieri, Veronica & Hartley, Daniel & Hurst, Erik, 2013. "Endogenous gentrification and housing price dynamics," Journal of Public Economics, Elsevier, vol. 100(C), pages 45-60.
- Veronica Guerrieri & Daniel Hartley & Erik Hurst, 2010. "Endogenous gentrification and housing price dynamics," Working Paper 1008, Federal Reserve Bank of Cleveland.
- Erik Hurst & Daniel Hartley & Veronica Guerrieri, 2011. "Endogenous Gentrification and Housing Price Dynamics," 2011 Meeting Papers 1418, Society for Economic Dynamics.
- Todd Sinai & Nicholas S. Souleles, 2005.
"Owner-Occupied Housing as a Hedge Against Rent Risk,"
The Quarterly Journal of Economics,
MIT Press, vol. 120(2), pages 763-789, May.
- Todd Sinai & Nicholas S. Souleles, 2005. "Owner-occupied housing as a hedge against rent risk," Working Papers 05-10, Federal Reserve Bank of Philadelphia.
- Todd Sinai & Nicholas S. Souleles, 2003. "Owner-Occupied Housing as a Hedge Against Rent Risk," NBER Working Papers 9462, National Bureau of Economic Research, Inc.
- David Genesove, 2003.
"The Nominal Rigidity of Apartment Rents,"
The Review of Economics and Statistics,
MIT Press, vol. 85(4), pages 844-853, November.
- Banks, James & Blundell, Richard & Oldfield, Zoë & Smith, James P., 2010.
"House Price Volatility and the Housing Ladder,"
IZA Discussion Papers
5173, Institute for the Study of Labor (IZA).
- Linneman, Peter, 1985. "An economic analysis of the homeownership decision," Journal of Urban Economics, Elsevier, vol. 17(2), pages 230-246, March.
- Robert Hill, 2011. "Hedonic Price Indexes for Housing," OECD Statistics Working Papers 2011/1, OECD Publishing.
- Randal Verbrugge, 2008.
"The Puzzling Divergence Of Rents And User Costs, 1980-2004,"
Review of Income and Wealth,
International Association for Research in Income and Wealth, vol. 54(4), pages 671-699, December.
- Randal Verbrugge, 2009. "The Puzzling Divergence of Rents and User Costs, 1980-2004," Working Papers 422, U.S. Bureau of Labor Statistics.
- Randal Verbrugge & Thesia I. Garner, 2009.
"Reconciling User Costs and Rental Equivalence: Evidence from the U.S. Consumer Expenditure Survey,"
427, U.S. Bureau of Labor Statistics.
- Garner, Thesia I. & Verbrugge, Randal, 2009. "Reconciling user costs and rental equivalence: Evidence from the US consumer expenditure survey," Journal of Housing Economics, Elsevier, vol. 18(3), pages 172-192, September.
- Jonathan Halket & Matteo Pignatti, 2012. "Housing tenure choices with private information," Economics Discussion Papers 717, University of Essex, Department of Economics.
- Hwang, Min & Quigley, John M. & Son, Jae Young, 2006.
"The Dividend Pricing Model: New Evidence from the Korean Housing Market,"
Berkeley Program on Housing and Urban Policy, Working Paper Series
qt293422vk, Berkeley Program on Housing and Urban Policy.
- Min Hwang & John Quigley & Jae-young Son, 2006. "The Dividend Pricing Model: New Evidence from the Korean Housing Market," The Journal of Real Estate Finance and Economics, Springer, vol. 32(3), pages 205-228, May.
- Campbell, Sean D. & Davis, Morris A. & Gallin, Joshua & Martin, Robert F., 2009. "What moves housing markets: A variance decomposition of the rent-price ratio," Journal of Urban Economics, Elsevier, vol. 66(2), pages 90-102, September.
- Ortalo-Magne, Francois & Rady, Sven, 2002. "Tenure choice and the riskiness of non-housing consumption," Journal of Housing Economics, Elsevier, vol. 11(3), pages 266-279, September.
- Fran�ois Ortalo-Magné & Sven Rady, 2006. "Housing Market Dynamics: On the Contribution of Income Shocks and Credit Constraints ," Review of Economic Studies, Oxford University Press, vol. 73(2), pages 459-485.
- Robert Novy-Marx, 2009. "Hot and Cold Markets," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 37(1), pages 1-22.
- Zvi Griliches, 1961. "Hedonic Price Indexes for Automobiles: An Econometric of Quality Change," NBER Chapters, in: The Price Statistics of the Federal Goverment, pages 173-196 National Bureau of Economic Research, Inc.
- Marjorie Flavin & Takashi Yamashita, 2002. "Owner-Occupied Housing and the Composition of the Household Portfolio," American Economic Review, American Economic Association, vol. 92(1), pages 345-362, March.
- Joshua Gallin, 2008. "The Long-Run Relationship Between House Prices and Rents," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 36(4), pages 635-658, December.
- Clapp, John M & Giaccotto, Carmelo, 1992. "Estimating Price Trends for Residential Property: A Comparison of Repeat Sales and Assessed Value Methods," The Journal of Real Estate Finance and Economics, Springer, vol. 5(4), pages 357-74, December.
- Péter Hudomiet & Gábor Kézdi & Robert J. Willis, 2011. "Stock market crash and expectations of American households," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 26(3), pages 393-415, 04.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.