IDEAS home Printed from https://ideas.repec.org/h/pal/pmschp/978-3-031-36836-3_8.html
   My bibliography  Save this book chapter

Real Estate Market

In: Financial Markets Efficiency and Economic Behaviour

Author

Listed:
  • Gian Maria Tomat

    (Bank of Italy)

Abstract

In the real estate market, the no arbitrage condition defines a relation between the housing price in the current period, the rent and the subsequent period price. The housing premium is the excess housing rate of return over the riskless rate. The quarterly real housing excess return has on average been greater than 10 per cent at a yearly rate in Italy in the 1996q01–2020q04 sample period and its standard deviation is of the same order of magnitude. The housing Sharpe ratio provides further evidence on the completeness of financial markets. In forecasting regressions the natural logarithm of the rent/price ratio is positively correlated to forthcoming real housing excess returns and housing return volatility at horizons of 4, 8 and 16 quarters. Rational speculative bubbles may explain housing price volatility, although they do not entail return predictability. A behavioural approach considers the implications of under- and overreaction to news regarding fundamental value, due to the use of heuristic rules. The two most common forms of mortgage contracts are adjustable and fixed rate mortgages.

Suggested Citation

  • Gian Maria Tomat, 2023. "Real Estate Market," Palgrave Macmillan Studies in Banking and Financial Institutions, in: Financial Markets Efficiency and Economic Behaviour, chapter 0, pages 111-132, Palgrave Macmillan.
    • Handle: RePEc:pal:pmschp:978-3-031-36836-3_8
    DOI: 10.1007/978-3-031-36836-3_8
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pal:pmschp:978-3-031-36836-3_8. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.palgrave.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.