Growth and Predictability of Urban Housing Rents

77 Pages Posted: 12 Jul 2019 Last revised: 4 Apr 2022

See all articles by Piet Eichholtz

Piet Eichholtz

Maastricht University

Matthijs Korevaar

Erasmus School of Economics

Thies Lindenthal

University of Cambridge

Date Written: March 10, 2022

Abstract

This paper studies urban rental prices for half a millennium (1500–2020) and seven cities: Amsterdam, Antwerp, Bruges, Brussels, Ghent, London, and Paris. Based on a dataset of 436,000 rental cash flow observations, we build continuous annual indices of housing rents, which we employ to study the long-term developments in rental cash flows, as well as their predictability. We find that real rent growth has been limited, but with large differences across cities: average annual growth rates range between 0.12 percent for the Belgian cities to 0.30 percent for Paris. At the market level, we show that sluggish supply adjustment implies that past population growth negatively predicts current rental growth. At the individual asset level, we find that past excess rental growth rates are predictive of future rent revisions, and that increasing steepness of the term structure of contract rents is predictive for future rent levels.

Keywords: rents, urban growth, predictability

JEL Classification: R30, N93, N94

Suggested Citation

Eichholtz, Piet and Korevaar, Matthijs and Lindenthal, Thies, Growth and Predictability of Urban Housing Rents (March 10, 2022). Available at SSRN: https://ssrn.com/abstract=3418495 or http://dx.doi.org/10.2139/ssrn.3418495

Piet Eichholtz

Maastricht University ( email )

P.O. Box 616
Maastricht, Limburg 6200MD
Netherlands

Matthijs Korevaar (Contact Author)

Erasmus School of Economics ( email )

Netherlands

Thies Lindenthal

University of Cambridge ( email )

Trinity Ln
Cambridge, CB2 1TN
United Kingdom

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