Present-value models of land prices in England and Wales

Authors: Lloyd, T.A., Rayner, A.J. and Orme, C.D.

Journal: European Review of Agricultural Economics

Volume: 18

Issue: 2

Pages: 141-166

ISSN: 0165-1587

DOI: 10.1093/erae/18.2.141

Abstract:

Presents some parsimonious econometric models of the relationship between land prices and cash rents derived from an encompassing present-value framework. Alternatives based on adaptive, naive and rational (or perfect foresight) expectations are applied to three separate data sets on annual land prices in England and Wales. The empirical results support the adaptive expectations versions and imply that a real rate of discount of 2-3% per yr is used in the land market. The notion of disequilibrium pricing is examined but is not supported in the sample period. -Authors

Source: Scopus