The Rise and Fall of the Price-to-Rent Ratio: Why Are Superstar Cities Different?

• 成果类型: Article; Early Access
• 署名作者: Hilber, Christian A. L.; Mense, Andreas
• 署名单位: University of London; London School Economics & Political Science; University of Zurich
• 刊物名称: ECONOMIC JOURNAL
• ISSN/ISSBN: 0013-0133
• DOI: 10.1093/ej/ueaf124
• 发表日期: 2026
• 关键词: house prices; job creation; models

摘要

In most countries, during the 2000s and 2010s, house prices rose substantially relative to rents. This trend, however, was not uniform across space or time. The price-to-rent ratio increased much more strongly in the countries' superstar cities, surged during economic expansion periods, but fell during times of economic crisis. These stylised facts are consistent with a model that features spatial variation in the supply-price elasticity and autocorrelated local demand changes that trigger persistent changes in rent-growth expectations. The model predicts that in supply-inelastic locations, positive (negative) demand shocks trigger increases (decreases) in the price-to-rent ratio that last several years. Stronger demand-change persistence and lower discount rates amplify this effect. We test our model predictions using panel data for England. Our instrumental-variable first-difference estimates suggest that over half of the 153% increase in the price-to-rent ratio between 1997 and 2018 in Greater London can be explained by our mechanism.