Just as the price of a share should equal the discounted presentvalueof future profits, so the price of a house should reflect the future benefits of ownership either rental income or the implicit rent saved by an owner-occupier.
Just as thevalueof a company's shares should equal the discounted presentvalueof its future profits, so the price of a house should reflect the future benefits of ownership, either as rental income or in the rent saved by an owner-occupier.
Moroney argues that with low interest rates and low inflation, thepresentvalueof future profits goes up and so do the multiples investors are willing to pay for companies with higher profit growth.