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Journal cover: Journal of European Real Estate Research

Journal of European Real Estate Research

ISSN: 1753-9269

Online from: 2008

Subject Area: Built Environment

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The effect of subsidy on housing construction in various regions of Sweden


Document Information:
Title:The effect of subsidy on housing construction in various regions of Sweden
Author(s):Abukar Warsame, (Real Estate and Construction Management, School of Architecture and the Built Environment (ABE), Royal Institute of Technology, Stockholm, Sweden), Mats Wilhelmsson, (Real Estate and Construction Management, School of Architecture and the Built Environment (ABE), Royal Institute of Technology, Stockholm, Sweden), Lena Borg, (Real Estate and Construction Management, School of Architecture and the Built Environment (ABE), Royal Institute of Technology, Stockholm, Sweden)
Citation:Abukar Warsame, Mats Wilhelmsson, Lena Borg, (2010) "The effect of subsidy on housing construction in various regions of Sweden", Journal of European Real Estate Research, Vol. 3 Iss: 3, pp.228 - 244
Keywords:Construction industry, Government policy, Housing, Sweden
Article type:Research paper
DOI:10.1108/17539261011094731 (Permanent URL)
Publisher:Emerald Group Publishing Limited
Abstract:

Purpose – The purpose of this paper is to explore the extent that interest subsidies have impacted on the total production of Swedish single- and multifamily houses. It also intends to examine whether tenure neutrality provision of interest subsidy that subsidy policy advocates was maintained.

Design/methodology/approach – Using a multiple regression of two models, a balanced panel data from 1975 to 2006 that consist of various related construction cost variables of all regions of Sweden will be analyzed. Instrumental variable (IV) and seemingly unrelated regressions (SUR) will be utilized 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 it may increase the existing stocks of a low demand region but not the housing stocks of big regions where the demand is high. Moreover, a targeted subsidy may change the balance between different types of housings since lower construction costs due to the subsidy could favor the development of certain profitable housing types.

Originality/value – The paper tries to substantiate (empirically) the assertion that subsidy policies contributed both to the production of housing units in low demand regions and distortion of the preference of different tenures.



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