Theory 174/Housing markets/Ratio lens
Rents Track Vacancy
The claim
Rent growth is set by the ratio of demand to vacant stock, so a small vacancy buffer stabilises rents out of proportion to its size.
01Mechanism
Landlords set rents against the probability of reletting; vacancy determines that probability.
02Prediction
Rents should track the vacancy ratio.
03Refutation
Rents tracking population growth would remove vacancy.