The time value of housing: historical evidence on discount rates
Philippe Bracke, Edward W. Pinchbeck and James Wyatt
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. ? 2017 Bank of England. The Economic Journal published by John Wiley & Sons Ltd on behalf of Royal Economic Society
1 August 2018
The Economic Journal 128(613) , pp.1820-1843, 2018
https://openaccess.city.ac.uk/id/eprint/20352/7/Bracke_et_al-2018-The_Economic_Journal.pdf
This Journal article is published under the centre's Urban programme, Neighbourhoods programme.
This publication comes under the following theme: Housing