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Demand for rent-regulated apartments:The case of Sweden

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  • Wilhelmsson, Mats

    (Department of Real Estate and Construction Management, Royal Institute of Technology)

Abstract

The Swedish rental housing market is characterised by, among other things, a form of rent control in which rents remain lower than market rate. This means that distribution of rental apartments is not based on the tenants' willingness to pay for a specific apartment. Instead, in most cases, distribution is based on a person's position in the housing agency queue. In Stockholm, many public and private housing rental contracts are set up via a common queue administered by the municipal housing agency. Individuals with much time in the queue can access a more extensive selection of rental apartments. The purpose of the following study is to estimate the demand for rent-regulated apartments. We do so by investigating the relationship between queue time and apartment attributes. A so-called hedonic waiting time equation will be estimated. The implicit prices of the rental apartment will be related to the tenant's income, and income elasticity will be estimated in a second step. The results indicate a significant willingness to pay for rent-regulated apartments, and that the demand for rental apartments can partly be explained by regulated rents, and partly by tenants' income.

Suggested Citation

  • Wilhelmsson, Mats, 2021. "Demand for rent-regulated apartments:The case of Sweden," Working Paper Series 21/4, Royal Institute of Technology, Department of Real Estate and Construction Management & Banking and Finance.
    • Handle: RePEc:hhs:kthrec:2021_004
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    References listed on IDEAS

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    1. Anas, Alex & Eum, Sung Jick, 1984. "Hedonic analysis of a housing market in disequilibrium," Journal of Urban Economics, Elsevier, vol. 15(1), pages 87-106, January.
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    3. Anas, Alex, 1997. "Rent Control with Matching Economies: A Model of European Housing Market Regulation," The Journal of Real Estate Finance and Economics, Springer, vol. 15(1), pages 111-137, July.
    4. Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
    5. Van Ommeren, Jos N. & Van der Vlist, Arno J., 2016. "Households' willingness to pay for public housing," Journal of Urban Economics, Elsevier, vol. 92(C), pages 91-105.
    6. Marietta Haffner & Marja Elsinga & Joris Hoekstra, 2008. "Rent Regulation: The Balance between Private Landlords and Tenants in Six European Countries," European Journal of Housing Policy, Taylor and Francis Journals, vol. 8(2), pages 217-233.
    7. Smith, Lawrence B & Rosen, Kenneth T & Fallis, George, 1988. "Recent Developments in Economic Models of Housing Markets," Journal of Economic Literature, American Economic Association, vol. 26(1), pages 29-64, March.
    8. Marietta Haffner & Marja Elsinga & Joris Hoekstra, 2008. "Rent Regulation: The Balance between Private Landlords and Tenants in Six European Countries," International Journal of Housing Policy, Taylor & Francis Journals, vol. 8(2), pages 217-233.
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    Cited by:

    1. Bratu, Cristina & Bolotnyy, Valentin, 2023. "Immigrant intergenerational mobility: A focus on childhood environment," European Economic Review, Elsevier, vol. 151(C).

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    More about this item

    Keywords

    Rental housing market; Queuing time; Waiting list; Excess demand; Controlled rents;
    All these keywords.

    JEL classification:

    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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