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1 – 10 of over 8000Robert Wieser and Alexis Mundt
This paper aims to examine the main characteristics of the housing taxation and subsidy systems in six European Union countries. The structure of this support over the past two…
Abstract
Purpose
This paper aims to examine the main characteristics of the housing taxation and subsidy systems in six European Union countries. The structure of this support over the past two decades, before and after the global financial crisis has been investigated and its total effective dimensions have been approximated.
Design/methodology/approach
Official national data and existing literature on housing policy expenses have been analysed and the authors add their own estimations of missing data, where possible. Latest changes in housing policy guidelines and expenses were interpreted.
Findings
It was found that state support for housing is heavily underestimated by official data in most countries, mainly due to missing estimates for the value of imputed rents tax relief, reduced VAT rates and low real estate and capital gains taxation. Our estimates suggest that total public support for the housing sector reaches more than 3 per cent of the gross domestic product in three of the six countries, and about 2 per cent in the others. State support to the housing sector has developed quite differently in the investigated countries over the past decades. In particular, there was no universal downward trend.
Originality/value
This is the first attempt to provide a more comprehensive analysis of national housing policy expenses applying a very broad definition of state support for housing. In particular, we consider indirect tax advantages to the housing sector that are generally not taken into account. Furthermore, we apply a discounted present value approach of current housing policy expenses to facilitate international comparison.
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Abukar Warsame, Mats Wilhelmsson and Lena Borg
The purpose of this paper is to explore the extent that interest subsidies have impacted on the total production of Swedish single‐ and multifamily houses. It also intends to…
Abstract
Purpose
The purpose of this paper is to explore the extent that interest subsidies have impacted on the total production of Swedish single‐ and multifamily houses. It also intends to examine whether tenure neutrality provision of interest subsidy that subsidy policy advocates was maintained.
Design/methodology/approach
Using a multiple regression of two models, a balanced panel data from 1975 to 2006 that consist of various related construction cost variables of all regions of Sweden will be analyzed. Instrumental variable (IV) and seemingly unrelated regressions (SUR) will be utilized to examine the role of subsidy on housing production and tenure neutrality, respectively.
Findings
The results seem to indicate that a general subsidy is expected to be ineffective since it may increase the existing stocks of a low demand region but not the housing stocks of big regions where the demand is high. Moreover, a targeted subsidy may change the balance between different types of housings since lower construction costs due to the subsidy could favor the development of certain profitable housing types.
Originality/value
The paper tries to substantiate (empirically) the assertion that subsidy policies contributed both to the production of housing units in low demand regions and distortion of the preference of different tenures.
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Even though housing prices in Germany are low by international standards, housing in urban areas has become less affordable. Since 2018, certain families aspiring to become…
Abstract
Purpose
Even though housing prices in Germany are low by international standards, housing in urban areas has become less affordable. Since 2018, certain families aspiring to become homeowners may apply for a capital subsidy (Baukindergeld) that contributes to their down-payment. This paper analyzes whether this subsidy is an appropriate policy instrument to achieve the desired goals.
Design/methodology/approach
The paper presents an equilibrium model with two types of households (low- and high-income) and two types of houses (low- and high-quality) to examine equilibrium prices before and after the introduction of a subsidy.
Findings
This subsidy not only makes owning less affordable for the lower-income household but also increases the prices of more expensive houses that are not within reach of lower-income households.
Research limitations/implications
Because this policy has just come into effect in 2018 and no data are available yet, the implications of the model are yet to be tested.
Practical implications
The implications of the subsidy run counter to its intentions as house prices will rise even further. Other policies or fewer regulations for new construction may be more effective.
Social implications
An instrument aiming to relieve financially weaker families, this subsidy will increase prices for all house types, assuming continuing supply shortages observed in the German urban housing markets.
Originality/value
This is the first paper on Germany’s new homeownership subsidy. The model is general enough to be used with any explicit demand and supply functions and is thus applicable to other markets with low supply elasticities.
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Bashir Olanrewaju Ganiyu, Julius Ayodeji Fapohunda and Rainer Haldenwang
This study aims to identify and establish effective housing financing concepts to be adopted by government in achieving its mandate of providing sustainable affordable housing for…
Abstract
Purpose
This study aims to identify and establish effective housing financing concepts to be adopted by government in achieving its mandate of providing sustainable affordable housing for the poor to decrease the building of shacks, as well as proposing solutions to the housing deficit in South Africa. A rise in demand and shortage in supply of housing calls for the need to address issues of affordable housing in South Africa, and developing countries in general, to ensure a stable and promising future for poor families.
Design/methodology/approach
Literature has revealed that the South African government, at all levels, accorded high priority to the provision of low-cost housing. Thus, government has adopted subsidy payment as a method of financing affordable housing to ensure that houses are allocated free to the beneficiaries. This also addresses the historically race-based inequalities of the past, but unfortunately, this has not been fully realised. This study uses a sequential mixed method approach, where private housing developers and general building contractors were the research participants. The qualitative data were analysed using a case-by-case analysis, and quantitative data were analysed using a descriptive statistical technique on SPSS.
Findings
The results of the qualitative analysis reveal a gross abuse of the housing subsidies system by the beneficiaries of government-funded housing in South Africa. This is evident from illegal sale of the houses below market value. This has led to a continual building of shacks and an increased number of people on the housing waiting list instead of a decrease in the housing deficit. The results from quantitative analysis affirm the use of “Mortgage Payment Subsidies, Mortgage Payment Deductions, Down-Payment Grant and Mortgage Interest Deductions” as viable alternatives to subsidy payment currently in use to finance affordable housing projects by the South African Government.
Practical implications
At the moment, the focus of the South African National Government is continual provision of free housing to the historically disadvantage citizens, but the housing financing method being used encourages unapproved transfer of ownership in the affordable housing sector. This study thus recommends the use of an all-inclusive housing financing method that requires a monetary contribution from the beneficiaries to enable them take control of the process.
Originality/value
The relational interface model proposed in this study will reduce pressure on government budgetary provision for housing and guarantee quick return of private developers’ investment in housing. Government must, as a matter of urgency, launch a continuous awareness programme to educate the low-income population on the value and the long-term benefits of the housing.
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Oliver Bischoff and Wolfgang Maennig
Between 1997 and 2005, the German government provided owner‐occupied subsidies to fund new private housing construction and stock purchases to increase owner‐occupied housing. The…
Abstract
Purpose
Between 1997 and 2005, the German government provided owner‐occupied subsidies to fund new private housing construction and stock purchases to increase owner‐occupied housing. The purpose of this paper is to analyse the impact of these subsidies on total housing construction for the 1997‐2007 period using regionalised data. This paper tests for differences between counties and cities and examines whether local participation in housing programs is related to regional migration and fertility. Based on the dynamic results, short‐ and long‐run elasticities with respect to the subsidy program are calculated.
Design/methodology/approach
A balanced panel data set is used that covers approximately 95 percent of all German NUTS‐3 regions (counties and independent cities) for the 1997‐2007 period. To control for serial correlation, possible endogenous relationships and omitted variable bias problems, the System Generalised Methods of Moments estimation technique is applied.
Findings
A significantly positive impact of subsidised construction is detected in counties with an elasticity of approximately 0.2 in the short run and 0.48‐0.58 in the long run. The elasticities in independent cities are significantly lower, at 0.11 and 0.32‐0.37, respectively. No significant effect of migration on construction was found, in contrast to a significantly positive effect of fertility, especially at the county level. The estimates suggest a significantly negative effect of subsidised stock purchases on total construction.
Research limitations/implications
Tests for other countries using regional data on interest rates, construction costs and housing prices could lead to further insights.
Practical implications
The findings suggest that further owner‐occupied subsidy programs should be geared toward families or larger households. It also seems important to provide sufficient building land to enable households to make use of housing construction subsidies.
Originality/value
This is the first regional paper to examine housing construction elasticities with respect to a subsidisation program for housing construction and stock purchases that was designed for virtually all households in a country. It is also the first paper to test for differences in participation in a large‐scale, national housing program related to migration and fertility.
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Cássio Besarria, Marcelo Silva and Diego Jesus
In recent years, housing prices in Brazil have shown a surprising growth. An important issue is trying to understand what elements can explain this behavior. This study aims to…
Abstract
Purpose
In recent years, housing prices in Brazil have shown a surprising growth. An important issue is trying to understand what elements can explain this behavior. This study aims to investigate the hypothesis that a generalized optimism associated with government policies directed to the housing sector may be behind the behavior of real estate prices. This study develops a dynamic stochastic general equilibrium (DSGE) model to investigate these issues. The results showed that subsidies combined with the easing of credit conditions were able to positively influence real estate prices. Moreover, unanticipated shocks had a greater impact on housing prices than anticipated shocks.
Design/methodology/approach
The DSGE model was developed to analyze the relationship between economic agents’ expectations about future economic developments, also known in the literature as “news shocks,” expansionary fiscal policy and housing prices in Brazil. The economy is composed of families, entrepreneurs, final goods firms, a financial sector and a fiscal authority. Families are divided into two groups: patients or savers and impatient or debtors. They differ in terms of their intertemporal discount factors. Both provide labor for firms producing non-durable goods. Impatient families are restricted in the amount of borrowing they can take. The production side of economy model is given by the consumer goods production sector. The financial sector is composed of a representative bank that pays the deposits made by patient families and channels resources for the granting of housing loans with the accumulation of assets subject to regulatory restrictions.
Findings
The results show that both price subsidies and subsidized interest rates exerted a positive influence on housing prices in Brazil. In response to a housing demand shock, housing prices display a greater increase the greater are the subsidies to low income families. The authors show that anticipated shocks have a larger impact on housing prices than unexpected shocks. Therefore, the results support the idea that the wave of good news, optimistic behavior and government policies aimed at the housing sector were behind the behavior of housing prices in Brazil.
Originality/value
There are some studies applied to the Brazilian economy that mention some of these stimuli. In this study, the authors focused on studies proposed by Mendonça et al. (2011), Mendonça (2013), Silva et al. (2014) and Besarria et al. (2016). In general, the authors show that there is a negative relationship between monetary policy instruments and real estate prices. This paper differs from these authors by considering the effects of government subsidies, subsidized interest rates and anticipated shocks from a DSGE model, thus explicitly addressing their effects on housing prices in Brazil.
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Sebastian Smart and Vicente Burgos
This paper aims to analyse the Chilean housing policy from a human rights perspective. The work is based on the framework to study socio, economic and social rights as human…
Abstract
Purpose
This paper aims to analyse the Chilean housing policy from a human rights perspective. The work is based on the framework to study socio, economic and social rights as human rights developed by the current special rapporteur on extreme poverty and human rights to describe the steps undertaken by the Chilean State in terms of recognition, institutionalisation and accountability of the right to adequate housing.
Design/methodology/approach
First, the authors describe the different levels of legal recognition of the right and the lack of constitutional and legislative recognition in the different levels of the Chilean Legal System. Second, they analyse the Chilean Housing Policy and the institutionalisation of the different elements that compose the right to adequate housing, describing and critically reviewing the Chilean housing policy in the past 30 years. The final section analyses the accountability of such policy, taking into consideration the developments of international and regional mechanisms and the processes of accountability lead by civil society and tribunals.
Findings
The paper concludes that a human rights perspective of the right to adequate housing with legal recognition could improve the accountability, the results and development of the Chilean housing policy.
Originality/value
The importance of this paper is both empirical and theoretical. Empirically, this paper adds to the current understanding of housing policies in Chile, aiming to complete the narrative of housing laws at the national level. Theoretically, this paper uses for the first time a recognition, institutionalisation and accountability human rights approach to analyse the Chilean housing policies and its loopholes at the national level.
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Johan Conijn and Frans Schilder
This paper aims to present a model that analyses the value gap, the difference between vacant possession value and tenanted investment value, for the houses of Dutch housing…
Abstract
Purpose
This paper aims to present a model that analyses the value gap, the difference between vacant possession value and tenanted investment value, for the houses of Dutch housing associations. The paper also aims to explore why the value gap is a structural phenomenon in The Netherlands and why it is an important factor contributing to the malfunctioning of the housing market. This gives an interesting expansion of the value gap theory.
Design/methodology/approach
By using the well‐known concept of user costs and using market equilibrium as a reference, the model quantifies the influence of six factors that cause the value gap. This is done for The Netherlands in total and for each of the 452 housing associations separately.
Findings
The value gap between the owner‐occupied and the rental sector is immense. This is especially the case with the rented houses owned by the housing associations, constituting one‐third of the total housing stock. The vacant possession value of these houses is on average €151,000; the reported tenanted investment value is no more than €33,000. Important factors that are responsible for this gap are, on the one hand, the fiscal subsidies in the owner‐occupied sector and, on the other hand, rent control and the policy of the housing associations characterised by a low rent level and high maintenance and management costs.
Originality/value
This is the first paper that analyses and quantifies the factors contributing to the value lost by Dutch housing associations' operations.
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Kahilu Kajimo‐Shakantu and Kathy Evans
The purpose of this research is to explore the possibility of integrating women‐centred savings schemes into formal finance systems in order to help such schemes to leverage…
Abstract
Purpose
The purpose of this research is to explore the possibility of integrating women‐centred savings schemes into formal finance systems in order to help such schemes to leverage finance for housing purposes.
Design/methodology/approach
The research adopts a case study approach that uses mainly semi‐structured interviews. The case studies involve two savings schemes with their respective supporting organisations and five commercial banks in South Africa.
Findings
The case studies show that, if savings systems are flexible and suitable to their needs, women are capable of saving and repaying housing loans. The results also suggest that the accumulated group savings and the savings schemes themselves act as good collateral. However, despite showing interest in involvement in the low‐income sector, banks do not have a financially viable and workable business model to exploit this potential market.
Research limitations/implications
Integrated community housing is essential. Future research is required to determine how good repayment rates could be achieved while maintaining risks at acceptable levels.
Practical implications
For practical purposes, collaboration with intermediary organisations working with women‐centred savings schemes would be a beneficial starting point in linking the savings schemes with formal finance systems.
Originality/value
The paper provides valuable reference material for understanding the gap that exists between what banks currently offer and what poor households require in meeting their housing needs. It may also be useful to researchers and practitioners as a basis for exploring innovative finance models for banks.
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The centralised system of apartment buildings was destroyed and replaced by a market‐type procedure of acquiring dwellings as private property. Privatisation started in Lithuania…
Abstract
The centralised system of apartment buildings was destroyed and replaced by a market‐type procedure of acquiring dwellings as private property. Privatisation started in Lithuania in 1991. At the beginning of 1996, 94 per cent of dwelling stock was privatised. One million two hundred thousand dwellings in Lithuania (including individual houses) with common space of 75,581,280 sq.m. existed ‐ that is 343 flats per capita. Physical lack of dwellings is the main problem. That is confirmed by number of families registered in municipalities in waiting lists for state support in order to afford dwellings. At the beginning of 1998, 96,661 families were included in the waiting lists for the support. Quantitative housing indicators are better in rural areas. However, lower qualitative indicators describe by provision with municipal service: water supply, sewerage, hot water, district heating. The urban population was not satisfied with size (living space), thermal and noise isolation characteristics. In this report Lithuanian household income and expenditures are shown for each of the ten income deciles. The affordability is greater in urban areas than the same deciles situated in the rural areas. Amendments to the Law on Housing Provision of the Republic of Lithuania were introduced on 21 October 1997. The main changes are presented in the article. Local government support in the housing sector of Vilnius is also described. The state government is responsible for the strategy in housing sector as well as government assistance. The main duties should be divided between state and local government. Social housing is the solution for needy people on condition of market economy, and financial support must be brought to the target groups of people.