The effect of subsidy on housing construction in various regions of Sweden
2010 (English)In: Journal of European Real Estate Research, ISSN 1753-9269, Vol. 3, no 3, 228-244 p.Article in journal (Refereed) Published
Purpose – The purpose of this paper is to explore the extent that interest subsidies have impacted onthe total production of Swedish single- and multifamily houses. It also intends to examine whethertenure neutrality provision of interest subsidy that subsidy policy advocates was maintained.
Design/methodology/approach – Using a multiple regression of two models, a balanced paneldata from 1975 to 2006 that consist of various related construction cost variables of all regions ofSweden will be analyzed. Instrumental variable (IV) and seemingly unrelated regressions (SUR) will beutilized to examine the role of subsidy on housing production and tenure neutrality, respectively.
Findings – The results seem to indicate that a general subsidy is expected to be ineffective since itmay increase the existing stocks of a low demand region but not the housing stocks of big regionswhere the demand is high. Moreover, a targeted subsidy may change the balance between differenttypes of housings since lower construction costs due to the subsidy could favor the development ofcertain profitable housing types.
Originality/value – The paper tries to substantiate (empirically) the assertion that subsidy policiescontributed both to the production of housing units in low demand regions and distortion of thepreference of different tenures.
Place, publisher, year, edition, pages
2010. Vol. 3, no 3, 228-244 p.
Sweden, Housing, Construction Industry, Goverment policy
IdentifiersURN: urn:nbn:se:kth:diva-47433ScopusID: 2-s2.0-84858810303OAI: oai:DiVA.org:kth-47433DiVA: diva2:455266
QC 201111142011-11-092011-11-092014-01-21Bibliographically approved