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Article
Publication date: 9 April 2021

Daniel Lo, Michael James McCord, John McCord, Peadar Thomas Davis and Martin Haran

The price-to-rent ratio is often regarded as an important indicator for measuring housing market imbalance and inefficiency. A central question is the extent to which…

Abstract

Purpose

The price-to-rent ratio is often regarded as an important indicator for measuring housing market imbalance and inefficiency. A central question is the extent to which house prices and rents form part of the same market and thus whether they respond similarly to parallel stimulus. If they are close proxies dynamically, then this provides valuable market intelligence, particularly where causal relationships are evident. Therefore, this paper aims to examine the relationship between market and rental pricing to uncover the price switching dynamics of residential real estate property types and whether the deviation between market rents and prices are integrated over both the long- and short-term.

Design/methodology/approach

This paper uses cointegration, Wald exogeneity tests and Granger causality models to determine the existence, if any, of cointegration and lead-lag relationships between prices and rents within the Belfast property market, as well as the price-to-rent ratios amongst its five main property sub-markets over the time period M4, 2014 to M12 2018.

Findings

The findings provide some novel insights in relation to the pricing dynamics within Belfast. Housing and rental prices are cointegrated suggesting that they tend to move in tandem in the long run. It is further evident that in the short-run, the price series Granger-causes that of rents inferring that sales price information unidirectionally diffuse to the rental market. Further, the findings on price-to-rent ratios reveal that the detached sector appears to Granger-cause those of other property types except apartments in both the short- and long-term, suggesting possible spill-over of pricing signals from the top-end to the lower strata of the market.

Originality/value

The importance of understanding the relationship between house prices and rental market performance has gathered momentum. Although the house price-rent ratio is widely used as an indicator of over and undervaluation in the housing market, surprisingly little is known about the theoretical relationship between the price-rent ratio across property types and their respective inter-relationships.

Details

International Journal of Housing Markets and Analysis, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1753-8270

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Article
Publication date: 15 March 2019

Abdulkader Mostafa and Colin Anthony Jones

The UK experienced a substantial rise in owner occupation over the twentieth century, and many tenants still aspire to homeownership. These strong aspirations to own are…

Abstract

Purpose

The UK experienced a substantial rise in owner occupation over the twentieth century, and many tenants still aspire to homeownership. These strong aspirations to own are attributed to a set of financial and non-financial benefits. This paper aims to calculate, for the first time, the financial returns from buying versus renting in Britain for first-time buyers in 11 regions.

Design/methodology/approach

It applies a DCF approach based on historical housing and mortgage market data from 1975 to 2012.

Findings

The paper finds strong evidence that, in purely financial terms, buying has been always superior to renting in all regions of the UK over the period.

Practical implications

It gives a clear message of the financial benefits of homeownership over renting in Britain, even over very short time periods.

Originality/value

The paper is the first to apply a comprehensive DCF model to the choice between renting and owning.

Details

Journal of European Real Estate Research, vol. 12 no. 1
Type: Research Article
ISSN: 1753-9269

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Book part
Publication date: 15 July 2009

Ross B. Emmett and Kenneth C. Wenzer

Dublin, Wednesday, 1 a.m., Aug. 9, 1882.

Abstract

Dublin, Wednesday, 1 a.m., Aug. 9, 1882.

Details

Henry George, the Transatlantic Irish, and their Times
Type: Book
ISBN: 978-1-84855-658-4

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Article
Publication date: 11 April 2020

Amira Mukendi and Claudia Elisabeth Henninger

Currently, fashion rental is suggested as being a way to bring about sustainability in the fashion industry. Although there has been some success for brands in this space…

Abstract

Purpose

Currently, fashion rental is suggested as being a way to bring about sustainability in the fashion industry. Although there has been some success for brands in this space, as of yet fashion rental remains a niche form of consumption. This study aims to uncover consumer perspectives of fashion rental to identify opportunities for developing a fashion rental business that meets the needs of current consumers.

Design/methodology/approach

This is a qualitative study utilising semi-structured interviews combined with brainstorming and drawing exercises. Interviews were conducted with 17 women and three men.

Findings

Findings indicate that considerations around fashion rentals are utilitarian in nature focussing on functional benefits rather than more hedonistic ones. A spectrum of products that people would be most interested in renting is given.

Research limitations/implications

Although the study invited male and female participants, the sample is more female-heavy, which may reflect the fact that women tend to be more open to alternative modes of consumption.

Practical implications

An important implication is that asking consumers to rent clothing requires a significant change in mindset. Brands need to ensure that their services “make sense” for the consumer to consider it as a viable alternative to purchasing new clothing.

Originality/value

This paper proposes a spectrum of fashion items that consumers may be interested in renting; this aims to help brands develop services that meet consumer needs.

Details

Journal of Fashion Marketing and Management: An International Journal, vol. 24 no. 3
Type: Research Article
ISSN: 1361-2026

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Article
Publication date: 1 February 1983

Keith Fletcher and Alan Napier

Examines the threats posed to the UK rental industry by consumers' decision to buy. Traces the history of the UK rental industry, including the decline of black and white…

Abstract

Examines the threats posed to the UK rental industry by consumers' decision to buy. Traces the history of the UK rental industry, including the decline of black and white against the boom of colour, and the rise of brand consciousness. Addresses marketing issues including pricing and the location of showrooms. Discusses the consequences of competition in the marketplace. Highlights the results of a survey into consumers' attitudes on buying or renting. Asserts that consumer motivations to continue or renew a rental agreement are not the same as at the initial decision to rent, so rental companies must adopt new marketing tactics. Concludes that rental companies must reverse the trend for replacement decisions to favour purchase over renting or their future looks bleak.

Details

European Journal of Marketing, vol. 17 no. 2
Type: Research Article
ISSN: 0309-0566

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Article
Publication date: 2 May 2017

Darius Kulikauskas

This paper aims to use the user costs approach to identify the periods of over- and under-valuation in the Baltic residential real estate markets.

Abstract

Purpose

This paper aims to use the user costs approach to identify the periods of over- and under-valuation in the Baltic residential real estate markets.

Design/methodology/approach

Three alternative estimates of the user costs of homeownership in the Baltics are computed: one that does not discriminate between the leveraged and unleveraged parts of a house and the other that takes loan-to-value ratios into account.

Findings

The approach successfully identifies the overheating that took place in the Baltic real estate markets prior to the crisis of 2009 and shows that there is significant upward pressure for the housing prices in the Baltics in the low interest rate environment that became prevalent ever since.

Research limitations/implications

The paper uses only the current values of the fundamentals to compute the user costs. The framework could be augmented to account for the expected future developments of the fundamentals.

Practical implications

The macroprudential policy makers should monitor the developments in the Baltic residential real estate markets closely and be ready to act because an increase in the price-to-rent ratios might seem sustainable, given the current low interest rates, but could potentially bring harmful volatility when the monetary policy normalises.

Originality/value

This paper builds a novel data set on the real estate markets of the Baltic countries and is the first to derive the user costs of homeownership in the region. It is also among the first to identify periods of housing price misalignments from their fundamental values in the Baltic States.

Details

Journal of European Real Estate Research, vol. 10 no. 1
Type: Research Article
ISSN: 1753-9269

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Article
Publication date: 30 April 2019

Marcelo Cajias

This paper aims to develop a conceptual understanding and a methodological approach for calculating residential net initial yields for both a buy-to-hold and rental…

Abstract

Purpose

This paper aims to develop a conceptual understanding and a methodological approach for calculating residential net initial yields for both a buy-to-hold and rental investment strategy from hedonic models.

Design/methodology/approach

The markets modelled comprehend of dwellings for rent and sell in Germany. For each of them, two regression models are estimated to extract implicit prices and rents for an artificial identical dwelling and estimate the willingness to pay for the same asset from both a buy-to-hold and rental investment strategy.

Findings

The 3,381 estimated net initial yields in the 161 German markets showed a spatial pattern with the biggest and most attractive cities showing the lowest yields and a self-adjusting process in the markets surrounding the top cities. The net initial yields over time show that prices have increased stronger than rents, leading to rock bottom yields for residential assets and a significant premium in comparison to government bond yields. The approach responds to the spatial hierarchy of markets in Germany, meaning that the level of the estimated yields is accurate and achievable from an investment perspective.

Practical implications

The investment case in residential markets is certainly unique as net initial yields are scarce, especially due to the relatively low number of investment comparables. The paper sheds light on this problem from a conceptual and methodological perspective and confirms that investment yields are deducible by making usage of hedonic models and big data.

Originality/value

In the era of digitalization and big data, residential assets are mostly brought to the market via digital multiple listing systems. Transparency is an essential barrier when assessing the pricing conditions of markets and deriving investment decisions. Although international brokers do provide detailed investment comparables on – mostly commercial – real estate markets, the residential sector remains a puzzle when it comes to investment yields. The paper sheds light on this problem.

Details

International Journal of Housing Markets and Analysis, vol. 12 no. 4
Type: Research Article
ISSN: 1753-8270

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Article
Publication date: 2 May 2017

Hasnan Baber

This paper aims to provide comprehensive review of Islamic housing finance models. The paper provides detailed mechanism and solution to contemporary issues of these models..

Abstract

Purpose

This paper aims to provide comprehensive review of Islamic housing finance models. The paper provides detailed mechanism and solution to contemporary issues of these models..

Design/methodology/approach

This paper is conceptual in nature. Based on an extensive study of literature, this paper explains working of two Islamic models al-Bay’ Bithaman Ajil (BBA) and the Musharakah Mutanaqisah (MM) with hypothetical examples.

Findings

It was revealed in the study that BBA is just convergence of conventional housing finance and does not fall in line with shariah regulations. MM approach is a relative new concept and strictly following shariah guidelines. MM approach is based on welfare for all rather than profit for few. There were some issues spotted with MM model when implemented on the ground, and hence this study came up with solution to such issues.

Research limitations/implications

This paper cannot be tested until the models are practically applied. This MM contract is new and will take some time to be accepted by customers, but its reliability promises it..

Originality/value

This study is original and new, as it finds BBA not permissible which no other study has concluded so far. Also issues in these models, and their solutions were studied first time.

Details

Qualitative Research in Financial Markets, vol. 9 no. 2
Type: Research Article
ISSN: 1755-4179

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Article
Publication date: 1 August 2006

Eddie C.M. Hui

Mobility has wide‐range impacts on the financial management of property issues, such as consumption and investment. In the literature of residential mobility, household…

Abstract

Mobility has wide‐range impacts on the financial management of property issues, such as consumption and investment. In the literature of residential mobility, household life cycle is widely acknowledged as an important concept. An array of household demographic factors such as age has been repeatedly found to be significant in influencing mobility. Many previous researches offer few verifi able hypotheses or propositions and their results are conflicting. Some of them also suffer methodological inadequacies. This paper is an attempt to rectify this situation. There are two important contributions by the current research. One is a methodology that employs multivariate methods, which fills the gap of previous research. The second contribution is the large census dataset of Hong Kong which is rare in previous studies. The research is conducted under the framework of life cycle models with emphasis on economic and demographic variables of households. Demographic determinants are found to be more important in explaining population mobility among rental households while economic factors are more pertinent for owners. This may be explained by the different strategies adopted by renters and owners in satisfying their housing needs. Renters are envisaged to base their mobility decisions more on demographic factors. Owners, on the other hand, tend to view home buying as an investment as well and hence put more emphasis on economic factors. It is hoped that this research can shed more light on the topic of residential mobility by drawing on the experience of a large population residing in a small place, Hong Kong

Details

Journal of Financial Management of Property and Construction, vol. 11 no. 2
Type: Research Article
ISSN: 1366-4387

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Article
Publication date: 1 July 2001

Robert Cock and Nick French

Research in the late 1980s showed that in many corporate real estates users were not fully aware of the full extent of their property holdings. In many cases, not only was…

Abstract

Research in the late 1980s showed that in many corporate real estates users were not fully aware of the full extent of their property holdings. In many cases, not only was the value of the holdings unknown, but there was uncertainty over the actual extent of ownership within the portfolio. This resulted in a large number of corporate occupiers reviewing their property holdings during the 1990s, initially to create a definitive asset register, but also to benefit from more efficient use of space. Good management of corporately owned property assets is of equal importance to the management of other principal resources within the company. A comprehensive asset register can be seen as the first step towards a rational property audit. For the effective, efficient and economic delivery of services, it is vital that all property holdings are utilised to the best advantage. This requires that the property provider and the property user are both fully conversant with the value of the property holding and that an asset/internal rent/charge is made accordingly. The advantages of internal rent charging are twofold. First, it requires the occupying department to ‘contribute’ an amount to the business equivalent to the open market rental value of the space that it occupies. This prevents the treating of space as a free good and, as an individual profit centre, each department will then rationalise its holdings to minimise its costs. The second advantage is from a strategic viewpoint: by charging an asset rent, the holding department can identify the performance of its real estate holdings. This can then be compared to an internal or external benchmark to help determine whether the company has adopted the most efficient tenure pattern for its properties. rents by UK‐based corporate businesses and explains internal rents as a form of transfer pricing in the context of management and responsibility accounting. The research finds that the majority of charging organisations introduced internal rents primarily to help calculate true profits at the business unit level. However, less than 10 per cent of the charging organisations introduced internal rents primarily to capture the return on assets within the business. There was also a sizeable element of the market who had no plans to introduce internal rents. Here, it appears that, despite academic and professional views that internal rents are beneficial in improving the efficient use of property, opinion at the business and operational level has not universally accepted this proposition. This paper investigates the use of internal

Details

Journal of Corporate Real Estate, vol. 3 no. 3
Type: Research Article
ISSN: 1463-001X

Keywords

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