The Pass-Through of House Prices to Market Rents

House prices have risen rapidly in most advanced economies. This paper examines to which extent house prices have affected rental markets in 9 advanced economies. The analysis reveals that the short-term pass-through of house prices to rents is typically limited: ceteris paribus, a 10% increase in house prices increases rents by 0.39% within a year, and by 1.05% within two years. Country-specific analysis reveals that the pass-through is above average in the cases of France, Germany and Spain, close to the international average in the United States, while it is negligible in several other countries. In Canada, there is evidence that strong population growth has pushed up rents