The Time Value of Housing: Historical Evidence on Discount Rates
Edward Pinchbeck and
Economic Journal, 2018, vol. 128, issue 613, 1820-1843
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.
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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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