Dynamic Equilibrium of the Housing Market
نویسندگان
چکیده
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 ren tal. This model provid es an explanation as to why housing appreciatio n may not match in ̄ ation in the long-run steady state. We show that only under a very particu lar set of conditions, will housing prices grow at a rate greater than the in ̄ ation 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 stead y state when the rent± value ratio is equal to the net discount rate.
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