American Economic Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
Dynamics of the Long-Term Housing Yield: Evidence from Natural Experiments
American Economic Review
(pp. 1014–51)
Abstract
Each month, a fraction of UK property leases are extended by 90 years or more. We construct a new dataset using thousands of these natural experiments since 2000 and estimate the expected long-term housing yield, y*. After remaining steady at around 5 percent, y* starts to decline when the Great Recession hits and reaches a low of 2.7 percent in 2024. The decline is steeper in inelastic markets, while y* remains higher in regions more exposed to long-run climate risk. Our estimate of y* is updated in real time using public data.Citation
Bäcker-Peral, Verónica, Jonathon Hazell, and Atif Mian. 2026. "Dynamics of the Long-Term Housing Yield: Evidence from Natural Experiments." American Economic Review 116 (3): 1014–51. DOI: 10.1257/aer.20240513Additional Materials
JEL Classification
- E32 Business Fluctuations; Cycles
- G12 Asset Pricing; Trading Volume; Bond Interest Rates
- Q54 Climate; Natural Disasters and Their Management; Global Warming
- R31 Housing Supply and Markets
- R38 Production Analysis and Firm Location: Government Policy