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Transaction Costs for Single-family Houses: An International Comparison
2008 (English)In: Nordic Journal of Surveying and Real Estate Research, ISSN 1459-5877, E-ISSN 2341-6599, Vol. 5, no 1, 24-41 p.Article in journal (Refereed) Published
Abstract [en]

The transaction process and transaction costs for single-family houses in six countries are analyzed. Among the results for the "real" transaction costs, taxes included, are that transaction costs are lower in the countries where the broker has a more neutral role, and in the countries where the register system is more developed and where fewer parties are involved. In order to avoid high transaction costs it is important to avoid a situation where both buyer and seller have their own agent. Standardized information about properties, like the Home Information Pack in the UK, can however increase the efficiency of the market even though it increases the short run transaction cost.

Place, publisher, year, edition, pages
2008. Vol. 5, no 1, 24-41 p.
Keyword [en]
single-family houses, brokers, transaction cost, transaction process
National Category
Economics and Business
Identifiers
URN: urn:nbn:se:kth:diva-48717OAI: oai:DiVA.org:kth-48717DiVA: diva2:458374
Note
QC 20111122Available from: 2011-11-22 Created: 2011-11-22 Last updated: 2017-12-08Bibliographically approved
In thesis
1. Transaction cost and transparency on the owner-occupied housing market: An international comparison
Open this publication in new window or tab >>Transaction cost and transparency on the owner-occupied housing market: An international comparison
2011 (English)Doctoral thesis, comprehensive summary (Other academic)
Abstract [en]

This dissertation consists of four essays with specific objectives. The overall objective is, however, to seek a further understanding of the issue of cross-border residential transaction markets. While the first two essays focus specifically on transaction processes and costs in a number of selected countries, the two subsequent essays shift their attention towards the EU’s Internal Market and the impact of differences between the countries, with relation to the transparency of transaction markets. The research is primary based on studies of written sources, subject-specific literature and legislation. The main message is that organization of the transaction process affects transaction costs in different ways. It can be argued that efficiency is associated with a lowering of transaction costs. The efficiency of different structures depends on our perspective. Transparency is associated with the organisation of transactions and their needs, though the term is somewhat unclear. Generally, the term may refer to the ability of transaction participants to observe information concerning the transacting process, thereby increasing their knowledge to make informed decisions. Thus it can be argued that a better basis for the decision-making process presupposes information disclosure, more standardized transaction practices, synchronized legal systems, and both legible and transparent regulations. This leads to the design of a transparency system, which is based on an understanding of the need for the system and its goal. Although reaching transparency will be both complex and time-consuming, this study draws attention to certain key aspect of the need to encourage transparency.

The first two essays focus on how residential transactions are organized in selected countries and on the costs for carrying out these transactions. Essay II works with two hypotheses concerning the relation between the organizational structure and the transaction costs. The study shows that transaction processes and costs differ considerably between the countries and as a result it is difficult to arrange the countries in a clear way according to their rules. Moreover, there is no clear connection between a broker’s education level and how large a part in the process s/he plays. The total transaction costs excluding taxes vary from approximately 3 up to 8.5 percent. The costs are lower when the recording system is well arranged, when a broker has a bigger part in the process and when a conveyancer is impartial. In the countries where a broker has a higher education level and plays bigger part in the process, the broker’s commission is not any higher when compared to other countries in the study. The study shows also that transaction costs are lower in the countries where the broker has a more neutral role and where fewer parties are involved in the process. Thus in order to avoid high transaction costs, it is important to avoid situations where both buyer and seller have their own agents. Furthermore, the availability of standardized information about properties may increase the efficiency of the market even though it increases the short run transaction cost.

Essay III provides a theoretical framework for an analysis of the concept of transparency in residential property transactions within the EU’s internal market and tries to identify the essential factors that need to be addressed with respect to transparency of procedural, regulative and economic features. Essay IV seeks a further understanding of the issue of transparency in the residential property transaction market and attempts to define the state of transparency on the basis of selected EU-countries, in accord with five specific dimensions. The essential points are that an increase in cross-border transactions increases demand for easy access to information in other countries, and that the studied literature focuses on the coordination of legal systems, which produces systems that are more uniform and legally secured, and on broadening the mortgage market. Some of the aspects analysed in the study are far from transparent while others may be considered relatively transparent. The degree of transparency in the EU’s internal market is determined by how transparency is defined, since something may be transparent based on a certain criteria but not on others, especially when the concept is a relative one and subject to changes. The study raises some key aspect as a basis for discussion about the encouragement of transparency.

Place, publisher, year, edition, pages
Stockholm: KTH Royal Institute of Technology, 2011. 15 p.
Series
Trita-FOB-PHD, 2011:5
Keyword
transaction process, transaction cost, real estate transaction, property transaction, residential transaction, cross-border transaction, transparency
National Category
Economics and Business
Identifiers
urn:nbn:se:kth:diva-48747 (URN)978-91-85783-20-5 (Local ID)978-91-85783-20-5 (Archive number)978-91-85783-20-5 (OAI)
Public defence
2011-12-02, D3, Lindstedtsvägen 5, KTH, Stockholm, 13:00 (English)
Opponent
Supervisors
Note
QC 20111123Available from: 2011-11-23 Created: 2011-11-23 Last updated: 2011-11-23Bibliographically approved

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