Real Estate as a Hedge against Inflation Learning from the Swiss Case

Real Estate as a Hedge against Inflation Learning from the Swiss Case Tests the inflation‐hedging ability of Swiss real estate over the 1943‐1991 period and, for comparison purposes, that of stocks. Results show that in the long run real estate seems to provide a better hedge against inflation than common stocks. When the inflation rate is broken down into its expected and unexpected components, all coefficients are negative for stocks, whereas some coefficients are positive for real estate. This is particularly true for unexpected inflation. These results are interesting in that the proxy used for real estate (i.e. data pertaining to real estate mutual funds) should be a much better indicator of changes in the underlying real estate than indices which have been used so far. Moreover, the data exists for a very long time period, which makes it possible to test the long‐term ability of real estate to hedge against changes in the purchasing power. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Property Valuation and Investment Emerald Publishing

Real Estate as a Hedge against Inflation Learning from the Swiss Case

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Publisher
Emerald Publishing
Copyright
Copyright © 1994 MCB UP Ltd. All rights reserved.
ISSN
0960-2712
DOI
10.1108/14635789410063913
Publisher site
See Article on Publisher Site

Abstract

Tests the inflation‐hedging ability of Swiss real estate over the 1943‐1991 period and, for comparison purposes, that of stocks. Results show that in the long run real estate seems to provide a better hedge against inflation than common stocks. When the inflation rate is broken down into its expected and unexpected components, all coefficients are negative for stocks, whereas some coefficients are positive for real estate. This is particularly true for unexpected inflation. These results are interesting in that the proxy used for real estate (i.e. data pertaining to real estate mutual funds) should be a much better indicator of changes in the underlying real estate than indices which have been used so far. Moreover, the data exists for a very long time period, which makes it possible to test the long‐term ability of real estate to hedge against changes in the purchasing power.

Journal

Journal of Property Valuation and InvestmentEmerald Publishing

Published: Sep 1, 1994

Keywords: Inflation; Real estate; Share prices; Switzerland

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