House Prices and Fundamentals : 355 Years of Evidence

  title={House Prices and Fundamentals : 355 Years of Evidence},
  author={Brent W. Ambrose},
This paper examines the long run relation between prices and rents for houses in Amsterdam from 1650 through 2005. We first demonstrate that these series are cointegrated, a necessary condition for studying movements of the rent-price ratio. We then estimate the deviation of house prices from fundamentals and find that these deviations can be persistent and long-lasting. Lastly, we look at the feedback mechanisms between housing market fundamentals and prices, and find that market correction of… CONTINUE READING