Wang, Yuansheng, Yang, Haoxi, Chen, Zhizhen ORCID: https://orcid.org/0000-0001-6656-5854 and Feng, Yun (2025) Demographic trends, the rent-to-price ratio, and housing market returns. Journal of Banking and Finance (JBF):107437. ISSN 0378-4266 (Print), 1872-6372 (Online) (doi:10.1016/j.jbankfin.2025.107437)

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Abstract

We characterize the relationship between the rent-to-price ratio, expected re- turns, and expected rent growth in a dynamic housing valuation model, where the middle-aged-to-young (MY) ratio determines the slowly evolving mean of the rent-to-price ratio. The link between demographic trends and the housing mar- ket dynamics is established by analyzing how individuals’ housing demand varies across age cohorts using household-level survey data. Empirical results show that deviations of the rent-to-price ratio from its slowly evolving mean, which is deter- mined by the MY ratio, exhibit pronounced predictive power for returns but weak predictive power for rent growth. Further analysis reveals heterogeneous evidence across sample cities.

Item Type:	Article
Uncontrolled Keywords:	rent-to-price ratio, demographics, predictability, housing demand
Subjects:	H Social Sciences > H Social Sciences (General) H Social Sciences > HA Statistics H Social Sciences > HF Commerce
Faculty / School / Research Centre / Research Group:	Greenwich Business School Greenwich Business School > Political Economy, Governance, Finance and Accountability (PEGFA) Journal of Economic Literature Classification > Political Economy, Governance, Finance and Accountability (PEGFA) Greenwich Business School > School of Accounting, Finance and Economics
Last Modified:	10 Apr 2025 16:19
URI:	http://gala.gre.ac.uk/id/eprint/50198

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