House prices and rents in Spaindoes the discount factor matter?
- Ayuso Huertas, Juan
- Restoy Lozano, Fernando
ISSN: 0213-2710
Datum der Publikation: 2006
Nummer: 9
Seiten: 7-36
Art: Arbeitsdokument
Andere Publikationen in: Documentos de trabajo - Banco de España
Zusammenfassung
We estimate alternative price to rent ratios in the Spanish housing market by considering different stochastic discount factors in present value models similar to those used in the financial literature but where the higher rigidity that characterises this market is taken into account. We identify three robust across model regularities: i) the increase in the price to rent ratio since the late nineties helped at first to restore equilibrium, ii) further increases in house prices raised the ratio between 24% and 32% above equilibrium by 2004, although iii) at that time the ratio was only around 2% above its short term adjustment path towards a (new) long run equilibrium.