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Does Selling State Silver Generate Private Gold? Determinants and Impacts of State House Sales and Acquisitions in New Zealand

Listed author(s):
  • Katy Bergstrom


    (Motu Economic and Public Policy Research, University of Canterbury)

  • Arthur Grimes


    (Motu Economic and Public Policy Research, University of Waikato)

  • Steve Stillman


    (Motu Economic and Public Policy Research, University of Otago)

New Zealand experienced two natural experiments with respect to state-provided social housing after 1990. First, while continuing to acquire new state houses, the National Government substantially reduced the overall state house stock by selling a greater number of houses either to existing tenants (through the Home Buy scheme) or, if the house was vacant, to other purchasers (vacant sales). From 1999, the Labour-led government ended homebuys, greatly reduced vacant sales and increased acquisitions, resulting in a major increase in the state house stock. We examine determinants of the spatial distribution of homebuys, vacant sales and acquisitions over the period 1991–2006, focusing on levels of, and changes in, local deprivation status and house prices as determinants. Having modelled the determinants of each category, we test whether homebuys, vacant sales, and acquisitions in an area over one five-year period had an effect on changes in local deprivation and house prices in the succeeding five-year period, after controlling for initial levels of, and prior changes in, deprivation and house prices. We find that state house acquisitions in an area led to a subsequent rise in local deprivation, consistent with the policy aim of providing housing to those most in need. While vacant sales had no material effects, a greater number of homebuys in an area led to increased local real house price appreciation over the subsequent five year period. This finding, based on the results of a politically-driven natural experiment, is consistent with the hypothesis that a scheme that transforms existing tenants into homeowners (at the same location) improves community outcomes for the surrounding neighbourhood.

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Paper provided by Motu Economic and Public Policy Research in its series Working Papers with number 11_03.

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Length: 44 pages
Date of creation: Mar 2011
Handle: RePEc:mtu:wpaper:11_03
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  1. Green, Richard K. & White, Michelle J., 1997. "Measuring the Benefits of Homeowning: Effects on Children," Journal of Urban Economics, Elsevier, vol. 41(3), pages 441-461, May.
  2. Deborah A. Cobb-Clark & Vincent A. Hildebrand, 2006. "The Wealth And Asset Holdings Of U.S.-Born And Foreign-Born Households: Evidence From Sipp Data," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 52(1), pages 17-42, March.
  3. Donald R. Haurin & Toby L. Parcel & R. Jean Haurin, 2002. "Does Homeownership Affect Child Outcomes?," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 30(4), pages 635-666.
  4. Arthur Grimes & Steven Stillman & Hugh McDonald & Alex Olssen, 2010. "A State Housing Database: 1993-2009," Working Papers 10_13, Motu Economic and Public Policy Research.
  5. David Barker & Eric Miller, 2009. "Homeownership and Child Welfare," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 37(2), pages 279-303.
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