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Dynamics of the long-term housing yield: evidence from natural experiments

Author

Listed:
  • Bäcker-Peral, Verónica
  • Hazell, Joe
  • Mian, Atif

Abstract

Each month, a fraction of UK property leases are extended by 90 years or more. We construct a new dataset using thousands of these natural experiments since 2000 and estimate the expected long-term housing yield, y*. After remaining steady at around 5 percent, y* starts to decline when the Great Recession hits and reaches a low of 2.7 percent in 2024. The decline is steeper in inelastic markets, while y* remains higher in regions more exposed to long-run climate risk. Our estimate of y* is updated in real time using public data.

Suggested Citation

  • Bäcker-Peral, Verónica & Hazell, Joe & Mian, Atif, 2026. "Dynamics of the long-term housing yield: evidence from natural experiments," LSE Research Online Documents on Economics 129062, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:129062
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    File URL: https://researchonline.lse.ac.uk/id/eprint/129062/
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    More about this item

    JEL classification:

    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets
    • R38 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Government Policy

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