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

Verónica Bäcker-Peral, Joe Hazell and Atif Mian

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

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.

JEL-codes: E32 G12 Q54 R31 R38 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2026-03-12
New Economics Papers: this item is included in nep-hre and nep-uep
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Published in American Economic Review, 12, March, 2026, 116(3), pp. 1014 - 1051. ISSN: 0002-8282

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