Change search
ReferencesLink to record
Permanent link

Direct link
The effect of subsidy on housing construction in various regions of Sweden
KTH, School of Architecture and the Built Environment (ABE), Real Estate and Construction Management, Building and Real Estate Economics.ORCID iD: 0000-0002-1729-3933
KTH, School of Architecture and the Built Environment (ABE), Centres, Centre for Banking and Finance, Cefin.
KTH, School of Architecture and the Built Environment (ABE), Real Estate and Construction Management, Building and Real Estate Economics.ORCID iD: 0000-0002-6193-4427
2010 (English)In: Journal of European Real Estate Research, ISSN 1753-9269, Vol. 3, no 3, 228-244 p.Article in journal (Refereed) Published
Abstract [en]

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.
Keyword [en]
Sweden, Housing, Construction Industry, Goverment policy
National Category
URN: urn:nbn:se:kth:diva-47433ScopusID: 2-s2.0-84858810303OAI: diva2:455266
QC 20111114Available from: 2011-11-09 Created: 2011-11-09 Last updated: 2014-01-21Bibliographically approved
In thesis
1. Performamce of Construction Projects: Essays on Supplier Structure, Construction Costs and Quality Improvement
Open this publication in new window or tab >>Performamce of Construction Projects: Essays on Supplier Structure, Construction Costs and Quality Improvement
2011 (English)Doctoral thesis, comprehensive summary (Other academic)
Abstract [en]

The performance of the construction industry and its contribution to the welfare of society in comparison to other industries such as the manufacturing industry has lately been the focus of many commissioned reports and academic research publications. The so-called “iron triangle” of time, cost and quality have been the most important metrics of construction project performance, especially for the selection of appropriate procurement methods. The perceived inefficiencies emanate from, among other things, increasing construction costs, conflicts and client dissatisfaction, the fragmented nature of the industry, low competition, cost overruns and delays, and lack of quality improvement. There is observed disparity in increases in housing construction costs and an apparent lack of quality improvement of infrastructure transport projects. In Sweden, metropolitan regions experienced higher construction cost increases, while small regions showed less costs increases during economic booms. In order to address these perceived inefficiencies, numerous strategic and project level decisions that influenced the way that publicly owned properties and projects are procured, constructed, operated, and maintained have been made. The decision to transfer quality-related activities and quality assurance responsibilities from client to contractor approximately 25 years ago is one of the decisions that could have an impact on current quality of infrastructure transport projects. The disparity in increases in construction costs and quality improvement concerns could not only influence the performance of construction projects, but also can affect the way different actors in the sector interact with each other and achieve their divergent objectives.

The aim of this study is twofold. First, it tries to explain the observed disparity increases in construction costs between big (metropolitan) and medium/small regions. Second, it attempts to ascertain the extent of quality problems in infrastructure transport projects after the transfer of quality assurance responsibilities, and suggests measures that could improve the quality of infrastructure transport projects. Surveys and interviews were used as a means to collect data concerning both supplier structure in relation to housing construction costs and quality of construction projects. Other empirical data from a secondary source were also used.

The first part of the research offers an understanding of the behavior of contractors in specific economic situations, specifically by taking into consideration the long-run relationship between contractors and owners/developers. It ascertains that if contractors/subcontractors display opportunistic behavior during the economic boom, the result will be increased higher construction costs. We utilized transaction cost theory in exploring construction sector structures in an attempt to understand changes in the sector from an efficiency perspective. The analysis can also enrich the current understanding of the governance structure of Swedish construction firms and how they could influence construction costs.

As the response from the survey suggests, quality of infrastructure projects has not decreased after the transfer of quality assurance from client to contractor. However, the high number of respondents that indicated quality is the same as before the transfer raises a concern of lack of quality improvement. Respondents have overwhelmingly indicated that the lack of public client competence was one of the contributing factors of quality problems. It is argued that with client competence it is important to build-up through proper knowledge management, incentive systems, and training. Further, the retention of new skilled and experienced workers is an essential element for continuous quality improvement goals and objectives. A second opinion practice from independent experts and committees that focuses on the quality aspect of the projects can be introduced in the provision of infrastructure transport projects. Finally, it is argued that without client competence and a company culture that creates the right incentives, no procurement method can guarantee high quality.

Place, publisher, year, edition, pages
Stockholm: KTH Royal Institute of Technology, 2011. v, 34 p.
TRITA-FOB, 2011:3
National Category
Social Sciences
urn:nbn:se:kth:diva-47448 (URN)978-91-978692-9-4 (ISBN)
Public defence
2011-11-22, F3, Lindstedtsvägen 26, KTH, Stockholm, 13:00 (English)
QC 20111111Available from: 2011-11-11 Created: 2011-11-09 Last updated: 2014-01-21Bibliographically approved

Open Access in DiVA

No full text


Search in DiVA

By author/editor
Warsame, AbukarWilhelmsson, MatsBorg, Lena
By organisation
Building and Real Estate EconomicsCentre for Banking and Finance, Cefin

Search outside of DiVA

GoogleGoogle Scholar
The number of downloads is the sum of all downloads of full texts. It may include eg previous versions that are now no longer available

Total: 125 hits
ReferencesLink to record
Permanent link

Direct link