Price discovery in American and British Property Markets Essay

Price discovery in American and British belongings Markets - Essay ExampleOn the other hand, real-estate taxes accounted for 17.1 per cent of home-owners housing costs in Britain in 1983, compared to entirely 7.6 per cent in the United States.These home-ownership costs provide a simple cash-flow comparison of family housing cost, further they do not take into account a variety of other important factors, including, most importantly, the strike of mortgage interest tax relief and the appreciated value of the house. The results suggest that actual cost is highly sensitive to the rate of appreciation. However, using the average annual appreciation over the 1978-83 period, we calculate that, as a percentage of income, the real annual cost of home-ownership (excluding property tax and maintenance) was significantly lower in Britain than in the United States. Indeed, given that interest rates were lower than the rate of inflation of house prices, the real annual cost of purchasing a n ew home in Britain in either 1981 or 1983 was really negative.