Rent/price ratio is not only an important index of real estate investment income,but also a measure to determine the health of the real estate market.This paper first illustrates the concept of rent/sell ratio and rent/price ratio and then compares rent/price ratio with price/earnings in stock investment.This paper also analyzed the rent/price ratio of residence in the current market conditions through the data released by Ministry of Land Resources and the survey data of real estate market in Wuhan.The results show that under the current market conditions,judging the house prices through urban housing rent/price ratio was not good.Finally,this paper put forward some countermeasures,such as encouragment of residential rent,establishment of homogeneous housing price statistics system and standard management of residential renting so as to improve the accuracy of “rent/price ratio”.