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Impact of Population Shocks on Housing Market Dynamics in Swedish Municipalities 1998-2022

Author

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  • Wilhelmsson, Mats

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

Abstract

This study explores the causal relationship between population shocks and housing prices in Swedish municipalities. Using a spatial difference-in-differences (DiD) methodology, we analyse data from 290 municipalities over 24 years (1998--2022) to identify the impact of unexpected demographic changes on housing market dynamics. Our approach compares municipalities experiencing significant negative population shifts (treatment group) with those with stable population trends (control group), utilising cumulative summation (CUSUM) tests to identify shocks. The findings indicate that population shocks significantly affect housing prices, with unexpected population declines leading to a 5–10% decrease over 1–6 years after the shock. The impact is more pronounced in smaller municipalities than in larger municipalities with a less elastic housing supply. These results emphasise the critical role of demographic changes in shaping housing markets.

Suggested Citation

  • Wilhelmsson, Mats, 2024. "Impact of Population Shocks on Housing Market Dynamics in Swedish Municipalities 1998-2022," Working Paper Series 24/7, Royal Institute of Technology, Department of Real Estate and Construction Management & Banking and Finance.
    • Handle: RePEc:hhs:kthrec:2024_007
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    More about this item

    Keywords

    population shocks; housing prices; causal relationship; cumulative sum; difference-in-differences;
    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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