Verónica Bäcker-Peral
Princeton University
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March 1, 2024 - Article
The long-term yield of housing, or rent-to-price ratio, contains information about the expected long-term outlook of the economy. Estimating it is difficult, as transitory factors such as monetary policy, credit booms, short-run asset market bubbles, and capital adjustment costs can affect the...
Every month, a fraction of UK property leases are extended for another 90 years or more. We build a new dataset of thousands of these natural experiments from 2000 onwards to estimate the expected long term housing yield, y*. Starting from a level of 5.3%, y* starts to fall during the Great...
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