However, it is generally believed that residential leasing is usually difficult to be used for market speculation, and the rent under market equilibrium often truly reflects the overall supply and demand relationship in the residential market; However, residents' behavior of buying houses often has potential investment, which makes residential transactions often speculative, and house prices may deviate from the value and produce bubbles.
Therefore, the ratio of house price to rent is one of the important indicators to measure the real estate market bubble.
Theoretically, the ratio of house price to rent is the reciprocal of income reduction interest rate.
Therefore, if we can determine the objective interest rate of income reduction, then we can get a reasonable ratio of house price to rent.
Many scholars have conducted in-depth discussions on the determination of the interest rate of income reduction, and all have their own opinions, such as the seven viewpoints summarized by Yamamoto and the concept of "real interest rate" put forward by Lin.
Lin also believes that the real interest rate can be directly used as the interest reduction rate of land, and if the interest reduction rate of buildings is increased by 2% on the basis of this interest rate.
The national standard "Code for Real Estate Appraisal (GB/T5029 1- 1999)" points out that the return reduction rate can be determined by the method of safe interest rate plus risk adjustment value.
The safe interest rate can be the annual interest rate of one-year national debt or one-year deposit announced by the People's Bank of China in the same period; The risk adjustment value shall be determined according to the current economic situation and future forecast of the area where the appraisal object is located.