Question

Why the price-rent ratio can be implemented to find out whether houses are overpriced? What is...

Why the price-rent ratio can be implemented to find out whether houses are overpriced? What is the relationship between carrying costs and price-rent ratio? Explain the answer.
0 0
Add a comment Improve this question Transcribed image text
Answer #1

Price-rent ratio measures the ratio of home price in the market and the rent being charged for the property. On the basis of historical data, standard value of the ratio is identified. With the help of this ratio, overpricing or underpricing of the property can be identified. The increased level of price, will increase the value of price-rent ratio and overpricing can be established and vice versa. So, price-rent ratio, will help gauge the market conditions and its inflated nature of demand and supply of the property.

Carrying cost is the cost, owners have to pay when they own the property. So, increase in carrying cost, will increase the price of the property as well as the rent. Hence, there is a direct and positive relationship between carrying cost and price- rent ratio.

Add a comment
Know the answer?
Add Answer to:
Why the price-rent ratio can be implemented to find out whether houses are overpriced? What is...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions
ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT