Search results

Transaction costs, responsive housing supply, rent controls, tenant protection, and access to credit affect residential mobility – these different parts of housing policy are included in what has been defined as housing regimes, which embrace regulations, laws, norms, and ideology as well as economic factors. In this chapter, we investigate how these regimes change by using institutional theories of path dependence. We use Sweden as an example and study three Swedish housing market reforms during the past decades that may have affected residential mobility, each related to one of the main institutional pillars of housing provision: tenure legislation, taxation, and finance. More precisely, we study the development of the rental regulation since the late 1960s, the tax reform in 1991, and the new reforms on mortgages since 2010. What caused these reforms? What were the main mechanisms behind them, and why did they occur at the time they did? We argue, besides affecting residential mobility, these reforms have the common feature of including interesting elements of path dependence and forming critical junctures that have led the development on to a new path. Institutions of tenure legislation, housing finance, and taxation are often claimed to have effects on residential mobility. Although they are seldom designed with the explicit aim of supporting (or counteracting) residential mobility, they may sometimes do so as more or less unintended consequences.

This paper aims to investigate the presence of a housing bubble using Swedish data from 1986Q1-2016Q4 by using various methods.

First, the authors use affordability indicators and asset-pricing approaches, including the price-to-income ratio, price-to-rent ratio and user cost, supplemented by a qualitative discussion of other factors affecting house prices. Second, the authors use cointegration techniques to compute the fundamental (or long-run) price, which is then compared with the actual price to test the degree of Sweden’s housing price bubble during the studied period. Third, they apply the univariate right-tailed unit root test procedure to capture bursting bubbles and to date-stamp bubbles.

The authors find evidence for rational housing bubbles with explosive behavioral components beginning in 2004. These bubbles do not continuously diverge but instead periodically revert to their fundamental value. However, the deviation is persistent, and without any policy correction, it takes decades for real house prices to return to equilibrium.

The policy implication is that monetary policy designed to contain mortgage demand and thereby prevent burst episodes in the housing market must address external imbalances, as revealed in real exchange rate undervaluation. It is unlikely that current policies will stop the rise of house prices, as the growth of mortgage credit, improvement in Sweden’s international competitiveness and the path of interest rates are much more important factors.

The purpose of this study is to investigate the Granger causal link between the stock market index and housing prices in terms of apartment and villa prices.

Monthly data from September 2005 to October 2013 on apartment prices, villa prices, the stock market index, mortgage rates and the consumer price index were used. Statistical methods were applied to explore the long-run co-integration and Granger causal link between the stock market index and apartment and villa prices in Sweden.

The results indicate that the stock market index and housing prices are co-integrated and that a long-run equilibrium relationship exists between them. According to the Granger causality tests, bidirectional relationships exist between the stock market index and apartment and villa prices, respectively, supporting the wealth and credit-price effects. Moreover, variations in apartment and villa prices are primarily caused by endogenous shocks.

To the authors’ best knowledge, this study represents a first analysis of the causal nexus between the stock market and the housing market in terms of apartment and villa prices in the Swedish context using a vector error-correction model to analyze monthly data.

The purpose of this paper is to analyze the effects of Swedish rent controls on observed vacancy rates for rental housing.

Housing vacancy rates are unevenly distributed among Swedish municipalities. In large expansive municipalities, such as Malmö, Göteborg and Stockholm, vacancy rates are very low, while in declining or smaller municipalities such as those in the northern and interior parts of Sweden, vacancy rates are considerably higher. This implies welfare losses not only in growing municipalities with queues for rental apartments but also in municipalities that are shrinking since the controlled rents there are higher than market rents and cause higher vacancy rates than with market rents. The authors estimate the influences of various determining factors, such as population growth, population size, rent levels, construction, demolition and market orientation of rents, on the observed vacancy rates.

The authors find that that these factors affect the vacancy rates differently depending on whether a municipality is large or small, growing or shrinking. Population growth, in percent per year, plays an important role in explaining the observed vacancy rates in declining regions.

A research task that remains to be done is to calculate the welfare losses due to rent higher than the market rent for municipalities in contraction.

To reduce the welfare losses of rent control, both in expanding and contracting municipalities, economists' straightforward recommendation to deregulate the rent control should, in principle, be carried out.

In many countries, rent control regulations are limited to cities, such as New York City. The paper shows that the Swedish rent control system however, applies nationwide, except for annual rent increases, which are set locally through negotiation.

This paper aims to assess the long-run drivers and short-term dynamics of real house prices in Sweden for 1986Q1 to 2016Q4. More specifically, the author examines the extent to which real house prices are determined by affordability, demographics and asset price factors.

The author conducts a cointegration analysis and applies a vector autoregression model to examine the long- and short-run responsiveness of Swedish real house prices to a number of key categories of fundamental variables.

The empirical results indicate that house prices will increase in the long run by 1.04 per cent in response to a 1 per cent increase in household real disposable income, whereas real after-tax mortgage interest and real effective exchange rates show average long-term effects of approximately – 8 and – 0.7 per cent, respectively. In addition, the results show that the growth of real house prices is affected by growth in mortgage credit, real after-tax mortgage interest rates and disposable incomes in the short run, whereas the real effective exchange rate is the most significant determinant of Swedish real house appreciation.

The impact of the two lending restrictions been implemented after the financial crisis – the mortgage cap in October 2010 and the amortization requirement in June 2016 – are ineffective to stabilize the housing market. This suggests that macroprudential measures designed to ease pressure on housing prices and reduce risks to financial stability need to focus on these fundamentals and address the issues of tax deductibility on mortgage rates and the gradual implementation of debt-to-income limits to contain mortgage demand and improve households’ resilience to shocks.

The aim of this chapter is to investigate regional inequality and centralization tendencies in Sweden. For this, we use official data from Statistics Sweden on house prices and employment. The data is on the municipality level and covers the period 1985–2014. The research question then becomes, in relation to employment and house prices, which municipalities have gained and which have lost during this period? The time period has been divided into three subperiods that reflect different phases in the process of economic structural change. Two major economic crises are used to signal the end and the start of new structural phases in the Swedish economy. The study uses two dimensions of local economy: employment rates and house prices in municipalities in relation to the national mean. The results indicate increasing divergence between Swedish municipalities over the period. However, the magnitude of the divergence differs within the studied period. Particularly, when it comes to house prices, the third subperiod (2009–2014) shows increasing divergence between Stockholm and Gothenburg in relation to Malmö and the rest of country. Further, when we study the two dimensions simultaneously in accordance with our model, the number of municipalities with above-national-mean employment rates and house prices decreases over time. In the last period, 2009–2014, municipalities with means above the national mean are concentrated in urban agglomerations mainly located close to Sweden’s three largest cities.

This study examines the long term effects of macroeconomic fundamentals on apartment price dynamics in major metropolitan areas in Sweden and Germany.

The main approach is panel cointegration analysis that allows to overcome certain data restrictions such as spatial heterogeneity, cross-sectional dependence, and non-stationary, but cointegrated data. The Swedish dataset includes three cities over a period of 23 years, while the German dataset includes seven cities for 29 years. Analysis of apartment price dynamics include population, disposable income, mortgage interest rate, and apartment stock as underlying macroeconomic variables in the model.

The empirical results indicate that apartment prices react more strongly on changes in fundamental factors in major Swedish cities than in German ones despite quite similar development of these macroeconomic variables in the long run in both countries. On one hand, overreactions in apartment price dynamics might be considered as the evidence of the price bubble building in Sweden. On the other hand, these two countries differ in institutional arrangements of the housing markets, and these differences might contribute to the size of apartment price elasticities from changes in fundamentals. These arrangements include various banking sector policies, such as mortgage financing and valuation approaches, as well as different government regulations of the housing market as, for example, rent control.

In distinction to the previous studies carried out on Swedish and German data for single-family houses, this study focuses on the apartment segment of the market and examines apartment price elasticities from a long term perspective. In addition, the results from this study highlight the differences between the two countries at the city level in an integrated long run equilibrium framework.

Drawing on paradox theory, this study explores how ambidextrous sustainability relates to organisational performance in hybrid organisations represented by Swedish municipal housing corporations, and how this relationship is contingent on the organisational structure of these organisations.

The study relies on the data collected from Swedish municipal housing corporations. These data sources consist of a survey sent to the management team members in Swedish municipal housing corporations, financial and non-financial archival data on these corporations, interviews with the management team and board members, and observations of meetings involving the management team and board of directors at a Swedish municipal housing corporation. Quantitative data of the study were analysed using descriptive statistics, correlation analysis and linear multiple regression analysis. Qualitative data were analysed employing deductive thematic analysis and were used to illustrate and discuss the results of the quantitative analysis.

The quantitative findings show that ambidextrous sustainability, i.e. the alignment between an explorative orientation and an exploitative orientation towards sustainability, has a weakly positive relationship with financial performance and a positive relationship with social performance in hybrid organisations represented by Swedish municipal housing corporations. The study further shows that a high level of the structural element “connectedness” weakened the relationship between the ambidextrous sustainability and financial performance of the organisation in the study. In contrast, a lower level of connectedness reinforced and strengthened this relationship. Our qualitative material illustrates how the quantitative findings could be explained by the interaction between the board of directors and the management team of these hybrid organisations.

The study shows how ambidextrous sustainability, employed for conceptualisation of the sustainability strategy in hybrid organisations, represented by Swedish municipal housing corporations, can impact on facets of performance (i.e. financial, social and environmental) differently. The study further highlights the importance of organisational structures in these relationships in a hybrid context.

The purpose of this study is to investigate the Granger causal link between bank lending and housing prices.

Several econometric methods, including Granger causality tests based on a vector error correction model, were applied to analyse monthly time series data in the Swedish context. The data cover bank lending, apartment prices, villa prices, mortgage rates and the consumer price index from September 2005 to October 2013.

The results indicate that bank lending and housing prices are cointegrated. According to Granger causality tests, bidirectional relationships exist between bank lending and each of apartment and villa prices, confirming the financial accelerator mechanism. However, earlier shocks arising from housing prices themselves account for the greatest variation in future prices.

To the authors’ knowledge, this study represents the first analysis of the causal link between bank lending and the housing market in terms of apartment and villa prices in the Swedish context.

Concerning migration on a national level, two phenomena emerge: people migrating from one region to another and people moving from the countryside to the cities. The geographical shift of the population between regions in a country is a slow process. In Sweden, only a few percent of the population migrate yearly. Nevertheless, migration has caused and still causes considerable redistribution of the population toward the metropolitan regions in Sweden. This section will emphasize general trends in population concentration through urbanization and migration in Sweden and compare these trends with changes in other countries.