Dynamic Equilibrium of the Housing Market
This paper, derived within a general equilibrium framework, demonstrates that housing price can be explicitly expressed as a combination of an exponential and linear function of housing rental. This model provides an explanation as to why housing appreciation may not match inflation in the long-run steady state. We show that only under a very particular set of conditions, will housing prices grow at a rate greater than the inflation rate. Evidence from the Hong Kong housing market supports the predictions of theory. Our model indicates that the housing market will be in the long-run steady state when the rent-value ratio is equal to the net discount rate.
Year of publication: |
1999
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Authors: | Tse, Raymond Y. C. ; Webb, James R. |
Published in: |
Urban Studies. - Urban Studies Journal Limited. - Vol. 36.1999, 13, p. 2361-2373
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Publisher: |
Urban Studies Journal Limited |
Saved in:
Online Resource
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