Question

How is the following treated in national income calculation?

Owner-occupied houses

Answer 1

Imputed rent of owner-occupied houses is included in national income because it represents the value of housing services provided by the owner to themselves. Although no actual rent is paid, these services have a market value comparable to rented properties. To reflect this, an estimated (imputed) rent is calculated based on current market rates. Since national income accounts for the value of all goods and services produced, this imputed rent is included as it represents a productive service within the economy.