Politická ekonomie 2023, 71(6):668-708 | DOI: 10.18267/j.polek.1408

Ceny nemovitostí a dlouhodobé úrokové sazby

Jiří Pour ORCID...
UniCredit Bank, Vysoká škola ekonomická v Praze, Praha, Česká republika

House prices and long-term interest rates

The article deals with the question of whether there is an equilibrium relationship between long-term interest rates and rental yields or real estate prices. In the theoretical part, an arbitrage relationship with the real estate market is shown, emphasizing the importance of nominal interest rates in the house price-setting process. Simplified theoretical relationships are empirically tested on panel data for a number of countries in the world. The results suggest that there is a cointegrating relationship between long-term interest rates and rental yields. Rental yields tend to adjust to interest rates over a long time period dominantly through house price movements, not rent price movements. Furthermore, among other things, we found that house prices are positively influenced by lower investment freedom or higher ratio of people aged 20-34 to people 65+. Finally, a simple model-based outlook for house prices in Czechia is shown, suggesting a "soft landing" of house prices in 2023 and following years.

Keywords: House prices, interest rates, rental yield, panel regression
JEL classification: E37, E39, E44

Received: November 25, 2022; Revised: May 19, 2023; Accepted: August 21, 2023; Prepublished online: November 21, 2023; Published: December 19, 2023  Show citation

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Pour, J. (2023). House prices and long-term interest rates. Politická ekonomie, 71(6), 668-708. doi: 10.18267/j.polek.1408
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