Scandinavian Working Papers in Economics
Working Paper Series,
Royal Institute of Technology, Department of Real Estate and Construction Management & Banking and Finance
No 24/6: Youth Displacement in Rent-Controlled Housing: The Consequences of Housing Queues
Herman Donner ()
Additional contact information
Herman Donner: Department of Real Estate and Construction Management, Royal Institute of Technology, Postal: Teknikringen 10B, 100 44 Stockholm, Sweden
Abstract: The way which apartment with below market rents are assigned is a key determinant of the impact of rent control policies, and assignment of apartments through queuing is likely to disadvantage young households, which this study explores. Over 71,000 rental contracts mediated through a public housing queue in Stockholm between 2003 and 2023 are analyzed. As the market value of apartments have outpaced regulated rents, rent controls have become more severe over time. As a consequence, average waiting times increased substantially during the period, reaching 19.6 years in the city center in 2023. Two main consequences of this development emerge: First, the share of leases to young tenants (18-30 years) declined, while leases to older tenants (60+) rose. In the city center, leases assigned to young tenant leases dropped from 12.7% in 2003 to 4.4% in 2023, while the share of older tenants increased from 4.9% to 22.2%. Second, having accrued more time in the queue, older tenants are able to rent more subsidized apartments. For a 2-room, 60m² apartment in the city center, a 30-year-old is estimated to pay 29.2% higher rent than a 60-year-old in 2023. The analysis suggests that queue-based allocation of rent-controlled apartments increasingly favors older households over younger ones, with these trends intensifying as rent controls become more severe.
Keywords: rent control; housing supply; housing demand; housing misallocation
Language: English
36 pages, First version: June 24, 2024. Revised: September 19, 2024.
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