Just Accepted Manuscripts
Original Articles - Urban, Land, Environmental Appraisal and Economics

High Rents, Low Values: The Rent-to-Price Ratio as an Indicator of Urban Imbalance

pdf
  • Cristian Cannaos,
  • Giuseppe Onni,
  • Alessandra Casu,
  • Valentina Talu,
  • Nicola Solinas
Cristian Cannaos
Università degli Studi di Sassari
DOI: https://doi.org/10.36253/aestim-18147

Published 2026-10-23

Keywords

  • Rent-to-Price Ratio,
  • Urban Inequality,
  • Housing Market Imbalance

Copyright (c) 2026 Cristian Cannaos, Giuseppe Onni, Alessandra Casu, Valentina Talu, Nicola Solinas

Creative Commons License

This work is licensed under a Creative Commons Attribution 4.0 International License.

Crossref
Scopus
Google Scholar
Europe PMC

Abstract

Housing market imbalances can emerge not only in contexts of high property values, but also where relatively low real estate prices coexist with sustained rental demand. In such situations, rents may remain disproportionately high compared with property values, generating structural tensions in local housing systems. The rent-to-price ratio (RtPR) represents a useful indicator for capturing these dynamics, as it reflects the relationship between the rental and ownership markets. This paper investigates the RtPR analytical potential as a diagnostic tool for identifying socio-territorial housing imbalances and housing vulnerability.

The analysis tests this interpretive potential in the city of Sassari, using OMI data on property values and rents, municipal records on rental subsidy applications, and socio-demographic variables. The results show a significant association between high RtPR values and the spatial concentration of demand for housing support. These findings suggest that the RtPR can function not only as an indicator of real estate performance, but also as a proxy for detecting spatial patterns of housing vulnerability that are not captured by property values alone. While the exploratory and cross-sectional nature of the analysis prevents causal interpretation, the paper shows how the RtPR may contribute to the construction of more sensitive diagnostic tools for housing policy. From this perspective, the final section outlines the Housing Imbalance Composite Index (HICI) as a possible future development for integrating market indicators with contextual measures of housing vulnerability and housing-stock use.

pdf

References

  1. Accetturo, A., Manaresi, F., Mocetti, S., & Olivieri, E. (2014). Don’t stand so close to me: The urban impact of immigration. Regional Science and Urban Economics, 45, 45–56. https://doi.org/10.1016/j.regsciurbeco.2014.01.001
  2. André, C., Gil-Alana, L. A., & Gupta, R. (2014). Testing for persistence in housing price-to-income and price-to-rent ratios in 16 OECD countries. Applied Economics, 46(18), 2127–2138. https://doi.org/10.1080/00036846.2014.896988
  3. Ayuso, J., & Restoy, F. (2006). House prices and rents: An equilibrium asset pricing approach. Journal of Empirical Finance, 13(3), 371–388. https://doi.org/10.1016/j.jempfin.2005.10.004
  4. Baldini, M., & Poggio, T. (2012). Housing policy toward the rental sector in Italy: A distributive assessment. Housing Studies, 27(5), 563–581. https://doi.org/10.1080/02673037.2012.697549
  5. Beretić, N., & Talu, V. (2020). Social housing as an experimental approach to the sustainable regeneration of historic city centres: An ongoing study of Sassari City, Italy. Sustainability, 12(11), 4579. https://doi.org/10.3390/su12114579
  6. Brewer, M., Browne, J., Emmerson, C., Hood, A., & Joyce, R. (2019). The curious incidence of rent subsidies: Evidence of heterogeneity from administrative data. Journal of Urban Economics, 114, 103198. https://doi.org/10.1016/j.jue.2019.103198
  7. Campbell, J. Y., Davis, M., Gallin, J., & Martin, R. (2009). What moves housing markets: A variance decomposition of the rent–price ratio. Journal of Urban Economics, 66(2), 90–102. https://doi.org/10.1016/j.jue.2009.06.002
  8. Cellamare, C. (2022). PNRR: Rigenerazione urbana e housing. Archivio di studi urbani e regionali, 135(3), 183–201.
  9. Davis, M. A., Lehnert, A. & Martin, R. F. (2008), The rent-price ratio for the aggregate stock of owner-occupied housing. Review of Income and Wealth, 54(2), 279–284. https://doi.org/10.1111/j.1475-4991.2008.00274.x
  10. Disney, R., & Luo, G. (2017). The right to buy public housing in Britain: A welfare analysis. Journal of Housing Economics, 35, 51–68. https://doi.org/10.1016/j.jhe.2017.01.005
  11. Engsted, T., Hviid, S. J., & Pedersen, T. Q. (2016). Explosive bubbles in house prices? Evidence from the OECD countries. Journal of International Financial Markets, Institutions and Money, 40, 14–25. https://doi.org/10.1016/j.intfin.2015.07.006
  12. Fama, E. F., & French, K. R. (2025). House prices and rents. Review of Financial Studies, 38(2), 547–563. https://doi.org/10.1093/rfs/hhae065
  13. Fregolent, L., & Colini, L. (2024). La casa verso il cambiamento. Urbanistica Informazioni, 52(313), 35–39.
  14. Gallin, J. H. (2008). The Long-Run Relationship Between House Prices and Rents. Real Estate Economics, 36(4), 635–658, https://doi.org/10.1111/j.1540-6229.2008.00225.x
  15. Guerrieri, G., & Festa, M. (2023). Una possibile stima del rendimento lordo e netto dell’investimento in un’abitazione. In Quaderni dell’Osservatorio del Mercato Immobiliare (No. 1/2023). Agenzia delle Entrate – Osservatorio del Mercato Immobiliare.
  16. Helfer, F., Grossmann, V., & Osikominu, A. (2023). How does immigration affect housing costs in Switzerland? Swiss Journal of Economics and Statistics, 159(1), 5. https://doi.org/10.1186/s41937-023-00110-1
  17. Himmelberg, C., Mayer, C., & Sinai, T. (2005). Assessing high house prices: Bubbles, fundamentals and misperceptions. Journal of Economic Perspectives, 19(4), 67–92.
  18. Kishor, N. K., & Morley, J. (2015). What factors drive the price–rent ratio for the housing market? A modified present-value analysis. Journal of Economic Dynamics and Control, 58, 235–249. https://doi.org/10.1016/j.jedc.2015.06.006
  19. Lee, C., & Park, K. (2018). Analyzing the rent-to-price ratio for the housing market at the micro-spatial scale. International Journal of Strategic Property Management, 22(3), 223–233. https://doi.org/10.3846/ijspm.2018.1416
  20. Leviten-Reid, C., Digou, M., & Kennelly, J. (2025). Housing as a human right, rent supplements and the new Canada Housing Benefit. Housing Studies, 40(3), 565–588. https://doi.org/10.1080/02673037.2024.2307595
  21. Lo, D., McCord, M., McCord, J., Davis, P., & Haran, M. (2021). Rent or buy, what are the odds? Analysing the price-to-rent ratio for housing types within the Northern Ireland housing market. International Journal of Housing Markets and Analysis, 14(3), 552–569. https://doi.org/10.1108/IJHMA-08-2020-0103
  22. Manganelli, B., Morano, P., & Tajani, F. (2014). House prices and rents. The Italian experience. WSEAS Transactions on Business and Economics, 11, 219–226
  23. Mugnano, S. (2018). L’abitare condiviso: innovazione sociale in un sistema di welfare fragile. In Sviluppo urbano e politiche per la qualità della vita (pp. 185–204). Firenze University Press. https://doi.org/10.36253/978-88-6453-736-8
  24. Musil, R., & Kaucic, J. (2024). Housing Market Segmentation as a Driver of Urban Micro-Segregation? An In-Depth Analysis of Two Viennese Districts. Land, 13(9), 1507. https://doi.org/10.3390/land13091507
  25. Mussa, A., Nwaogu, U., Pozo, S. (2017). Immigration and housing: A spatial econometric analysis. Journal of Housing Economics, 35, 13–25. https://doi.org/10.1016/j.jhe.2017.01.002
  26. Sharpe, J. (2019). Re-evaluating the impact of immigration on the U.S. rental housing market, Journal of Urban Economics, 111, 14–34. https://doi.org/10.1016/j.jue.2019.04.001