Scandinavian Working Papers in Economics
Working Paper Series,
Royal Institute of Technology, Department of Real Estate and Construction Management & Banking and Finance
No 22/5: Long-term dynamics of new residential supply: A case study of the apartment segment in Sweden
Sviatlana Engerstam (), Abukar Warsame () and Mats Wilhelmsson ()
Additional contact information
Sviatlana Engerstam: Department of Real Estate and Construction Management, Royal Institute of Technology, Postal: Teknikringen 10B, 100 44 Stockholm, Sweden
Abukar Warsame: Department of Real Estate and Construction Management, Royal Institute of Technology, Postal: Teknikringen 10B, 100 44 Stockholm, Sweden
Mats Wilhelmsson: Department of Real Estate and Construction Management, Royal Institute of Technology, Postal: Teknikringen 10B, 100 44 Stockholm, Sweden
Abstract: Since the size of the homeownership ratio differs significantly between countries, it is important to understand the mechanisms that lie behind decrease or growth of certain sectors of the housing market like rentals and housing cooperatives. The aim of this study is to analyze the long-term dynamics of the new residential supply in Sweden’s three largest cities for the period of 1990-2020 and estimate in what way market fundamentals affect it through new construction and housing conversions. We apply panel data methodology and, in distinction to previous research, consider the development of the housing market (urban growth) as physical volume. The results demonstrate that structural changes are driven mainly by fundamental demand factors and that the displacement effect occurs primarily in the market’s rental sector and not in the owner-occupied segment. The apartment price per square meter, together with mortgage interest rates, are the major driving factors in the process of converting dwellings into housing cooperatives. Fundamental variables that affect new construction in both the rental and housing cooperative sectors are population and income growth. In the presence of a rent control environment, the rent or price level does not contribute to adding new units to the total housing stock.
Keywords: Housing supply; Swedish apartment market; Panel data analysis
Language: English
37 pages, June 21, 2022
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