The Time Value of Housing: Historical Evidence on Discount Rates

Philippe Bracke, Edward Pinchbeck and James Wyatt

Economic Journal, 2018, vol. 128, issue 613, 1820-1843

Abstract: Most London housing transactions involve trading long leases of varying lengths. We exploit this to estimate the time value of housing – the relationship between the price of a property and the term of ownership – over a 100 years and derive implied discount rates. For our empirical analysis, we compile a unique historical data set (1987–92) to abstract from the right to extend leases currently enjoyed by tenants. Across a variety of specifications and samples, we find that leasehold prices are consistent with a time declining schedule and low long‐term discount rates in housing markets.

Date: 2018
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Citations: View citations in EconPapers (17)

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https://doi.org/10.1111/ecoj.12501

Related works:
Working Paper: The time value of housing: historical evidence on discount rates (2017)
Working Paper: The time value of housing: historical evidence on discount rates (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:wly:econjl:v:128:y:2018:i:613:p:1820-1843

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