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House price responses to a national property tax reform

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  • Elinder, Mikael
  • Persson, Lovisa

Abstract

We show that house prices in general did not respond to a substantial cut in the national property tax in Sweden. The estimates are based on rich register data covering more than 100,000 sales over a time period of two and a half years. Because the Swedish property tax is national and thus unrelated to local public goods, our setting is ideal for causal identification of the property tax on house prices. We observe price increases only in a small segment of the market containing properties with very high tax values. We discuss, but can admittedly not empirically discriminate between, several potential explanations for why we find no evidence of capitalization except for the top segment of the market.

Suggested Citation

  • Elinder, Mikael & Persson, Lovisa, 2017. "House price responses to a national property tax reform," Journal of Economic Behavior & Organization, Elsevier, vol. 144(C), pages 18-39.
  • Handle: RePEc:eee:jeborg:v:144:y:2017:i:c:p:18-39
    DOI: 10.1016/j.jebo.2017.09.017
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    References listed on IDEAS

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    More about this item

    Keywords

    Announcement effects; Capitalization; Bounded rationality; Housing market; Inattention; Saliency; D1; D3; D4; H2; R3;

    JEL classification:

    • D1 - Microeconomics - - Household Behavior
    • D3 - Microeconomics - - Distribution
    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

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