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The Housing Stock, Housing Prices, and User Costs: The Roles of Location, Structure and Unobserved Quality

Nesheim, L; Oswald, F; Halket, J; (2020) The Housing Stock, Housing Prices, and User Costs: The Roles of Location, Structure and Unobserved Quality. (Cemmap Working Paper 5/20). Institute for Fiscal Studies: London, UK. Green open access

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Abstract

Which housing characteristics are important for understanding homeownership rates? How are housing characteristics priced in the rental and owner-occupied markets? And what can the answers to the previous questions tell us about economic theories of homeownership? Using the English Housing Survey, we estimate a selection model of the allocation of properties to the owner-occupied and rental sectors. Structural characteristics and unobserved quality are important for selection. Location is not. Accounting for selection is important for estimates of rent-to-price ratios and can explain some puzzling correlations between rent-to-price ratios and homeownership rates. These patterns are consistent with, among others, hypotheses of contracting frictions in the rental market likely related to housing maintenance.

Type: Working / discussion paper
Title: The Housing Stock, Housing Prices, and User Costs: The Roles of Location, Structure and Unobserved Quality
Open access status: An open access version is available from UCL Discovery
DOI: 10.1920/wp.cem.2020.520
Publisher version: http://doi.org/10.1920/wp.cem.2020.520
Language: English
Additional information: This version is the version of record. For information on re-use, please refer to the publisher’s terms and conditions.
Keywords: homeownership, housing, tenure choice, hedonic price
UCL classification: UCL
UCL > Provost and Vice Provost Offices > UCL SLASH
UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS
UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS > Dept of Economics
URI: https://discovery.ucl.ac.uk/id/eprint/10092127
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