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House Prices and Rents: Micro Evidence from a Matched Dataset in Central London

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  • Philippe Bracke

Abstract

Using 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.

Suggested Citation

  • Philippe Bracke, 2013. "House Prices and Rents: Micro Evidence from a Matched Dataset in Central London," SERC Discussion Papers 0127, Spatial Economics Research Centre, LSE.
  • Handle: RePEc:cep:sercdp:0127
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    Citations

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    Cited by:

    1. Huw Lloyd-Ellis & Derek Stacey & Allen Head, 2017. "Inequality, Frictional Assignment and Home-ownership," 2017 Meeting Papers 1336, Society for Economic Dynamics.
    2. Jonathan Halket & Lars Nesheim & Florian Oswald, 2015. "The housing stock, housing prices, and user costs: The roles of location, structure and unobserved quality," Sciences Po publications cwp73/15, Sciences Po.
    3. Jorda, Oscar & Knoll, Katharina & Kuvshinov, Dmitry & Schularick, Moritz & Taylor, Alan M., 2017. "The Rate of Return on Everything, 1870–2015," Working Paper Series 2017-25, Federal Reserve Bank of San Francisco.
    4. Muthoka, Sila, 2015. "Household Demand for Housing in Kenya," MPRA Paper 65469, University Library of Munich, Germany.
    5. Hill, Robert J. & Syed, Iqbal A., 2016. "Hedonic price–rent ratios, user cost, and departures from equilibrium in the housing market," Regional Science and Urban Economics, Elsevier, vol. 56(C), pages 60-72.
    6. Luis Eduardo Quintero, 2014. "Housing Consumption and Prices in a Unified Metropolitan Market with Heterogeneous Preferences," 2014 Papers pqu53, Job Market Papers.
    7. Baltagi, Badi H. & Li, Jing, 2015. "Cointegration of matched home purchases and rental price indexes — Evidence from Singapore," Regional Science and Urban Economics, Elsevier, vol. 55(C), pages 80-88.
    8. Bracke, Philippe & Pinchbeck, Edward & Wyatt, James, 2016. "The time value of housing: historical evidence on discount rates," Bank of England working papers 621, Bank of England.
    9. repec:eee:regeco:v:68:y:2018:i:c:p:204-225 is not listed on IDEAS
    10. Daniel Melser, 2017. "Residential Real Estate, Risk, Return and Home Characteristics: Evidence from Sydney 2002-14," ERES eres2017_296, European Real Estate Society (ERES).
    11. Jonathan Halket & Lars Nesheim & Florian Oswald, 2015. "The housing stock, housing prices, and user costs: the roles of location, structure and unobserved quality," CeMMAP working papers CWP73/15, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
    12. Halket, Jonathan & Pignatti Morano di Custoza, Matteo, 2015. "Homeownership and the scarcity of rentals," Journal of Monetary Economics, Elsevier, vol. 76(C), pages 107-123.
    13. repec:eee:juecon:v:102:y:2017:i:c:p:52-75 is not listed on IDEAS

    More about this item

    Keywords

    House prices; housing rents; price index;

    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

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