The time value of housing: historical evidence on discount rates
Edward Pinchbeck and
James Wyatt ()
Additional contact information
James Wyatt: parthenia.co.uk.
No 621, Bank of England working papers from Bank of England
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 hundred years and derive implied discount rates. For our empirical analysis, we compile a unique historical data set (1987 to 1992) 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.
Keywords: Housing; leasehold; discount rates (search for similar items in EconPapers)
JEL-codes: G10 R30 (search for similar items in EconPapers)
Pages: 43 pages
New Economics Papers: this item is included in nep-his and nep-ure
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Journal Article: The Time Value of Housing: Historical Evidence on Discount Rates (2018)
Working Paper: The time value of housing: historical evidence on discount rates (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:boe:boeewp:0621
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