Real estate prices strongly correlate with apartment rental prices
Real estate purchase prices and apartment rental prices exhibit a strong, long-term cointegrated relationship as measured by housing market indicators like the price-to-rent ratio.
Papers [1] and [2] directly discuss the relationship and cointegration between house prices and rental prices (using the price-to-rent ratio), indicating that they move together over time. The claim is well-supported by economic literature.
D. Lo, Y. Yau, M. McCord, M. Haran. Lead-Lag Relationship between the Price-to-Rent Ratio and the Macroeconomy: An Empirical Study of the Residential Market of Hong Kong. 2022. https://doi.org/10.3390/buildings12091345
This study utilizes the price-to-rent ratio to assess housing market conditions, demonstrating a recognized empirical link between property and rental pricing dynamics.
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D. Lo, M. McCord, John McCord, P. Davis, M. Haran. Rent or buy, what are the odds? Analysing the price-to-rent ratio for housing types within the Northern Ireland housing market. 2021. https://doi.org/10.1108/IJHMA-08-2020-0103
This paper finds that housing and rental prices are cointegrated, indicating that they move in tandem in the long run.
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