House Price Expectations, Labour Market Developments and the House Price to Rent Ratio: A User Cost of Capital Approach

McQuinn, Kieran; Monteiro, Teresa; O’Toole, Conor

doi:10.1007/s11146-019-09731-x

Cited by 11 publications

(7 citation statements)

References 17 publications

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“…In this Note, we also discuss in more detail the research presented in McQuinn et al (2019) which uses underlying finance theory and the user cost of capital method to present a Heat Index for Irish counties. This approach has the considerable advantage of having a particular theoretical structure and allows us 2 to decompose investors' attitudes to the housing market.…”

Section: Introductionmentioning

confidence: 99%

Irish house price sustainability: a county-level analysis

Allen-Coghlan¹,

McQuinn²,

O’Toole³

2019

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Section: Introductionmentioning

confidence: 99%

Irish house price sustainability: a county-level analysis

Allen-Coghlan¹,

McQuinn²,

O’Toole³

2019

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“…Typically, in the housing literature, when rent levels or growth rates are examined, they are done so in the context of house price movements. The house price to rent ratio is frequently examined, for example, as an indicator of stability or otherwise in housing markets; the ratio is examined in the context of the user cost of capital and the equilibrium or otherwise of the ratio is assessed (see McQuinn et al, 2021, andCronin andMcQuinn, 2016, for recent applications in an Irish context. )…”

Section: An Economic Model Of Rental Inflationmentioning

confidence: 99%

“…In addition to the rental and tenancy data available at a LEA level; we also add a county level estimate of unemployment. This is our main determinant of economic activity in the model; while it would be preferable to have such data available at a LEA level, no such indicator of economic activity is available from such a granular perspective (the manner in which the county level estimate of unemployment is calculated is detailed in McQuinn et al, 2021). However, in Ireland, given the small size and proximity of the LEAs, it is likely that county-level employment is a good proxy for what is happening at the LEA level.…”

Section: An Economic Model Of Rental Inflationmentioning

confidence: 99%

Rental inflation and stabilisation policies: international evidence and the Irish experience

coffey¹,

Hogan²,

McQuinn³

et al. 2022

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The mission of the Economic and Social Research Institute is to advance evidencebased policymaking that supports economic sustainability and social progress in Ireland. ESRI researchers apply the highest standards of academic excellence to challenges facing policymakers, focusing on 12 areas of critical importance to 21st Century Ireland.The Institute was founded in 1960 by a group of senior civil servants led by Dr T. K. Whitaker, who identified the need for independent and in-depth research analysis to provide a robust evidence base for policymaking in Ireland.Since then, the Institute has remained committed to independent research and its work is free of any expressed ideology or political position. The Institute publishes all research reaching the appropriate academic standard, irrespective of its findings or who funds the research.The quality of its research output is guaranteed by a rigorous peer review process. ESRI researchers are experts in their fields and are committed to producing work that meets the highest academic standards and practices.The work of the Institute is disseminated widely in books, journal articles and reports. ESRI publications are available to download, free of charge, from its website. Additionally, ESRI staff communicate research findings at regular conferences and seminars.The ESRI is a company limited by guarantee, answerable to its members and governed by a Council, comprising 14 members who represent a cross-section of ESRI members from academia, civil services, state agencies, businesses and civil society. The Institute receives an annual grant-in-aid from the Department of Public Expenditure and Reform to support the scientific and public interest elements of the Institute's activities; the grant accounted for an average of 30 per cent of the Institute's income over the lifetime of the last Research Strategy. The remaining funding comes from research programmes supported by government departments and agencies, public bodies and competitive research programmes.

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“…Determinants of urban house price Richardson et al (1974) Determinants include housing characteristics, general spatial variables, accessibility and environmental quality considerations Algieri (2013) Determinants include population construction costs, house supply, rent, income, credit and macroeconomic variables Droes and Van de Minne (2016) Determinacy changes over time Choi et al (2019) Influence of population structure on house price growth strengths as population growth increases Ceritoglu (2020) Income is an important driver of housing demand that determines housing demand for Turkey Hill andSyed (2016) andMcQuinn et al (2021) Quality should be considered in housing price analysis Price-rent ratios Clark and Lomax (2020) The PR ratio is explained by property characteristics, neighborhood and location Property type diversification Eichholtz (1995) Diversification across the region is more effective for the retail property but ineffective for office and office/R&D properties. Diversification is ineffective for retail properties Linkage of urban housing Clark and Lomax (2020) are one of the few examples that studies housing submarkets' pricerent ratio.…”

Section: Topics Authors Findingsmentioning

confidence: 99%

“…Ceritoğlu (2020) document for Turkey that income is an important driver of housing demand. Hill and Syed (2016) and McQuinn et al (2021) add that quality of housing should be considered in a house price analysis because median price and rent, the most common metrics in housing research, alone do not provide sufficient information. Particularly, Hill and Syed’s (2016) approach of using a large sample of 730,000 observations is a useful reference for house price research.…”

Section: Introductionmentioning

confidence: 99%

The price-rent dynamics and linkage of urban housing: evidence from Singapore

Bhandari

2021

IJHMA

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Purpose The aim of this paper is to examine dynamic linkages between price and rent and between property types. Intuition suggests that housing market segments experience different market cycles in response to macroeconomic shocks. However, they may be dynamically interlinked in urban areas because of substitutability. The linkage may even change, if preference weakens for multiple occupancies. A sudden reduction in apartment demand may create repercussions to other housing segments. Past analyses, despite their contributions, are static and do not consider possible linkages between property types. To fill this void, this paper investigates the price-rent dynamics for urban homes by adopting the case of Singapore. Design/methodology/approach This paper applies a methodology from Phillips et al. (2015) to Singaporean housing (price and rent) data. Phillips et al. (2015) recently proposed a test for an explosive root in time series data and has spurred several empirical applications in the bubble literature. Findings This paper finds for Singapore that the markets were subjected to explosive growth (where rents grew at a higher rate than prices did) during the Global Financial Crisis. Also, the results suggest that rent drives price and that non-landed housing (offices in central areas) leads to other residential housing (non-residential housing) in both price and rent. Practical implications Overall, the present findings suggest that rent drives price, while property types are interlinked. Non-landed homes and offices in central areas are the sources of repercussions. Under normal circumstances, rental shocks may be propagated positively from nonlanded housing (central offices) to the other residential (non-residential) property types as the present findings suggest, which enables us to infer that a decrease in non-landed housing (central offices) rent may lead to an increase in rent on other property types because pandemic shocks only shift demand fromone property type to another, unlike typical macroeconomic shocks. Originality/value Urban homes are faced with uncertainty arising from the COVID-19 outbreak for which city residents have a stronger incentive to exile to suburbs. Urban life may no longer be attractive because of social distancing and work from home policy. This has implications for urban home demands that are closely linked to urban house price and rent. In the present study, the paper set out to investigate the price-rent and property-type dynamics for urban homes in Singapore.

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House Price Expectations, Labour Market Developments and the House Price to Rent Ratio: A User Cost of Capital Approach

Cited by 11 publications

References 17 publications

Irish house price sustainability: a county-level analysis

Irish house price sustainability: a county-level analysis

Rental inflation and stabilisation policies: international evidence and the Irish experience

The price-rent dynamics and linkage of urban housing: evidence from Singapore

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