To self-owned property through collective construction projects: an analysis of socio-economic and monetary factors

Purpose: High rents cause displacement and segregation in German cities, which is why self-used residential property in cities is politically promoted. However, the affordability of homeownership is also declining in cities, which is why, groups of private individuals form private joint building ventures to buy urban vacant land to develop and build multi-family houses for later owner -occupancy. Therefore, it was investigated if private joint construction projects really represent an alternative to buying property from a conventional developer for small and middle-income households.Design/methodology/approach: First, a cluster analysis is performed to identify disparities within the collected financing data of the members of joint building ventures. Second, the typical members of joint building ventures are characterized and compared with data from the Socio-Economic Panel (SOEP) using a regression analysis. The evaluation of the data also determines whether the construction costs of joint building projects are relatively low, and whether this makes self-used residential property affordable for households with low and middle income. Findings: The cluster analysis enabled typical groups of people involved in joint building ventures. In conjunction with the subsequent regression analysis, it has been revealed that members of joint construction projetcs are highly homogeneous in terms of formal literacy. However, the comparison with a reference group revealed that the decision for a collective construction project does not depend on the level of net household income. As the projects are partly carried out by non-professional groups, different stakeholders have developed various preconditions through increased professionalization in order to minimize the uncertainty of the construction projects.