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Finnish Homes-Through Passages or Traps?

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  • Seppo Laakso
  • Heikki A. Loikkanen

Abstract

This is a study of tenure choice, housing demand and mobility in the submarkets of the Helsinki metropolitan area. The empirical analysis is based on data on households, type of tenure, housing characteristics and mobility for a sample of Helsinki residents at the end of 1980s. According to our results the probability of owning is affected not only by user costs of alternative tenure forms but also by permanent income and demographic variables. Results from the tenure specific housing demand models indicate that there are non-neutralities in the housing markets. Permanent income elasticities of housing demand are clearly positive in owner-occupied sector and systematically higher than in the rented sector. The demand for owner-occupied housing depends very strongly on the age of the household head. User cost per housing unit affects housing demand negatively in both tenure forms. Effective demand is greater in private housing sector. The results suggest that owner-occupied living is preferred with heavily subsidized households the least likely to move. In the rental sector, where the probability of moving is higher, it is also true that the most heavily subsidized households are the least likely to move. Copyright American Real Estate and Urban Economics Association.

Suggested Citation

  • Seppo Laakso & Heikki A. Loikkanen, 1995. "Finnish Homes-Through Passages or Traps?," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 23(4), pages 475-495.
  • Handle: RePEc:bla:reesec:v:23:y:1995:i:4:p:475-495
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    References listed on IDEAS

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    1. Rosen, Harvey S., 1985. "Housing subsidies: Effects on housing decisions, efficiency, and equity," Handbook of Public Economics,in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 1, chapter 7, pages 375-420 Elsevier.
    2. Ermisch, John & Di Salvo, Pamela, 1997. "The Economic Determinants of Young People's Household Formation," Economica, London School of Economics and Political Science, vol. 64(256), pages 627-644, November.
    3. Masnick, George S., 2001. "The New Demographics of Housing," Berkeley Program on Housing and Urban Policy, Working Paper Series qt9668w1w4, Berkeley Program on Housing and Urban Policy.
    4. Boyes, William J. & Hoffman, Dennis L. & Low, Stuart A., 1989. "An econometric analysis of the bank credit scoring problem," Journal of Econometrics, Elsevier, vol. 40(1), pages 3-14, January.
    5. Haurin Donald R. & Hendershott Patric H. & Kim Dongwook, 1994. "Housing Decisions of American Youth," Journal of Urban Economics, Elsevier, vol. 35(1), pages 28-45, January.
    6. Ermisch, John, 1999. "Prices, Parents, and Young People's Household Formation," Journal of Urban Economics, Elsevier, vol. 45(1), pages 47-71, January.
    7. Haurin, Donald R & Hendershott, Patric H & Kim, Dongwook, 1993. "The Impact of Real Rents and Wages on Household Formation," The Review of Economics and Statistics, MIT Press, vol. 75(2), pages 284-293, May.
    8. Donald R. Haurin & R. Jean Haurin & Steven Garasky, 2001. "Group living decisions as youths transition to adulthood," Journal of Population Economics, Springer;European Society for Population Economics, vol. 14(2), pages 329-349.
    9. Borsch-Supan, Axel, 1986. "Household formation, housing prices, and public policy impacts," Journal of Public Economics, Elsevier, vol. 30(2), pages 145-164, July.
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    Cited by:

    1. Tan, Teck Hong, 2011. "Measuring the willingness to pay for houses in a sustainable neighborhood," MPRA Paper 30446, University Library of Munich, Germany.
    2. H. Boumeester, 2001. "The demand for more expensive owner-occupancy in the Netherlands," ERES eres2001_122, European Real Estate Society (ERES).
    3. Tan, teck hong, 2011. "Neighborhood preferences of house buyers: the case of klang valley, malaysia," MPRA Paper 30420, University Library of Munich, Germany.
    4. Oikarinen, Elias, 2005. "Is Housing Overvalued in the Helsinki Metropolitan Area?," Discussion Papers 992, The Research Institute of the Finnish Economy.

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