The effect of ground leases on house prices in Helsinki

One imperfection in housing markets is imperfect knowledge about legal interests such as ground leases. Both actual reduced legal interest as well as uncertainty surrounding rights and future lease payments for houses constructed on leased land may affect prices relative to houses built on freehold land. We use regression analysis of sales prices of condominium transactions in Helsinki to examine the effect ground leases have on house prices. We find that prices on condominiums constructed on leased lots are discounted at least 5 %, on average. In addition, we see that the announcement of potentially large increases in base rents upon renewal contributes to the discount.

Social and physical environments in senior communities: The Finnish experience

Purpose – The purpose of this paper is to discuss residents’ views of social and physical environments in a co-housing and in a senior housing setting in Finland. Also, the study aims to point out important connections between well-being and built environment. Design/methodology/approach – The data include interviews and survey responses gathered in the cases. The results and analysis are presented at different case study levels, with the discussion and conclusions following this. Findings – The findings show that the physical environment and common areas have an important role to activate residents. When well-designed common areas exist, a higher level of engagement can be achieved by getting residents involved in the planning and running of activities. Research limitations/implications – This paper discusses residents’ experiences in two Finnish housing settings and it focuses on the housing market in Finland. Practical implications – The findings encourage investors and housing operators to design and invest common areas which could activate residents and create social contacts. Also, investors have to pay attention to the way these developments are managed. Originality/value – This study is the first to investigate the Finnish co-housing setting and compare social and physical environments in a co-housing and a senior house.

Urban growth dilemmas and solutions in China: Looking forward to 2030

China’s urbanization and industrialization are occupying farmland in large amounts, which is strongly driven by land finance regime. This is due to the intensified regional/local competition for manufacturing investment opportunities that push local governments to expropriate farmland at low prices while lease land at high market value to property developers. The additional revenue obtained in this way, termed financial increment in land values, can drive local economic growth, and provide associated infrastructure and other public services. At the same time, however, a floating population of large numbers of inadequately compensated land-lost farmers, although unable to become citizens, have to migrate into the urban areas for work, causing overheated employment and housing markets, with rocketing unaffordable housing prices. This, together with various micro factors relating to the party/state’s promotion/evaluation system play an essential role leading to some serious economic, environment and social consequences, e.g., on migrant welfare, the displacement of peasants and the loss of land resources that requires immediate attention. Our question is: whether such type of urbanization is sustainable? What are the mechanisms behind such a phenomenal urbanization process? From the perspective of institutionalism, this paper aims to investigate the institutional background of the urban growth dilemma and solutions in urban China and to introduce further an inter-regional game theoretical framework to indicate why the present urbanization pattern is unsustainable. Looking forward to 2030, paradigm policy changes are made from the triple consideration of floating population, social security and urban environmental pressures. This involves: (1) changing land increment based finance regime into land stock finance system; (2) the citizenization of migrant workers with affordable housing, and; (3) creating a more enlightened local government officer appraisal system to better take into account societal issues such as welfare and beyond.

Taloustilanteen heikkenemisestä johtuvat muutokset asuntosijoittamiseen pääkaupunkiseudulla 2008

Tutkielman tavoitteena on selvittää miten taloustaantuma vaikutti asuntosijoittamisen kiinnostavuuteen ja asuntomarkkinoilla käytävään keskusteluun vuonna 2008. Tuolloin Suomen talous taantui voimakkaasti ja nopeasti yllättäen myös ennusteita laativat asiantuntijat. Ekonomistien lausunnoista puuttui yhdenmukaisuus ja tarkkuus. Ne myös saattoivat muuttua merkittävästi lyhyellä aikavälillä. Taantumassa sijoitusviestintä on varovaista ja tarkasti muotoiltua. Sijoittajat uskovat mielellään muiden sijoittajien mielipiteitä ja käsityksiä vaikkei niiden taustalla olisikaan aina todennettua faktatietoa. Asiantuntijoiden tilastoihin halutaan uskoa vaikka niitä kohtaan koetaan epäilyksiä. Toisaalta asuntosijoittamisen kannattavuuteen ja taloudelliseen tuottoon halutaan uskoa vaikka asiantuntijat voisivat todistaa toisin. Tutkimus toteutettiin kvalitatiivisena tapaustutkimuksena jota analysoitiin Greimasin aktanttimallia mukaillen. Tutkimusaineisto koostui 14 Helsingin Sanomissa julkaistuista asuntosijoittamiseen liittyvistä artikkelista sekä 13 Taloussanomien keskustelupalstalla julkaistusta mielipidekirjoituksesta. Viestien merkityksiä käytiin läpi semioottisesti määrittelemällä eri aktanteille rooleja. Tarinassa sijoittajasubjektin objektina on asunto, jonka avulla pyritään saavuttamaan mahdollisimman suuri rahallinen tuotto. Lähettäjiä ovat muun muassa tilastojen laatijat ja sijoitusneuvojat. Kaikki optimaalisen sijoituspäätöksen tekemiseen vaikuttavat aktantit käydään tarkemmin läpi tutkimuksen loppupuolella.

Adapting to climate change: Combining economics and geomorphology in coastal policy

How is climate change affecting our coastal environment? How can coastal communities adapt to sea level rise and increased storm risk? These questions have garnered tremendous interest from scientists and policy makers alike, as the dynamic coastal environment is particularly vulnerable to the impacts of climate change. Over half the world population lives and works in a coastal zone less than 120 miles wide, thereby being continuously affected by the changes in the coastal environment [6]. Housing markets are directly influenced by the physical processes that govern coastal systems. Beach towns like Oak Island in North Carolina (NC) face severe erosion, and the tax assesed value of one coastal property fell by 93% in 2007 [9]. With almost ninety percent of the sandy beaches in the US facing moderate to severe erosion [8], coastal communities often intervene to stabilize the shoreline and hold back the sea in order to protect coastal property and infrastructure. Beach nourishment, which is the process of rebuilding a beach by periodically replacing an eroding section of the beach with sand dredged from another location, is a policy for erosion control in many parts of the US Atlantic and Pacific coasts [3]. Beach nourishment projects in the United States are primarily federally funded and implemented by the Army Corps of Engineers (ACE) after a benefit-cost analysis. Benefits from beach nourishment include reduction in storm damage and recreational benefits from a wider beach. Costs would include the expected cost of construction, present value of periodic maintenance, and any external cost such as the environmental cost associated with a nourishment project (NOAA). Federal appropriations for nourishment totaled $787 million from 1995 to 2002 [10]. Human interventions to stabilize shorelines and physical coastal dynamics are strongly coupled. The value of the beach, in the form of storm protection and recreation amenities, is at least partly capitalized into property values. These beach values ultimately influence the benefit-cost analysis in support of shoreline stabilization policy, which, in turn, affects the shoreline dynamics. This paper explores the policy implications of this circularity. With a better understanding of the physical-economic feedbacks, policy makers can more effectively design climate change adaptation strategies. (PDF contains 4 pages)

Strategy-proof tie-breaking

We study a general class of priority-based allocation problems with weak priority orders and identify conditions under which there exists a strategy-proof mechanism which always chooses an agent-optimal stable, or constrained efficient, matching. A priority structure for which these two requirements are compatible is called solvable. For the general class of priority-based allocation problems with weak priority orders,we introduce three simple necessary conditions on the priority structure. We show that these conditions completely characterize solvable environments within the class of indifferences at the bottom (IB) environments, where ties occur only at the bottom of the priority structure. This generalizes and unifies previously known results on solvable and unsolvable environments established in school choice, housing markets and house allocation with existing tenants. We show how the previously known solvable cases can be viewed as extreme cases of solvable environments. For sufficiency of our conditions we introduce a version of the agent-proposing deferred acceptance algorithm with exogenous and preference-based tie-breaking.

Strategy-proofness and essentially single-valued cores revisited

We consider general allocation problems with indivisibilities where agents' preferences possibly exhibit externalities. In such contexts many different core notions were proposed. One is the gamma-core whereby blocking is only allowed via allocations where the non-blocking agents receive their endowment. We show that if there exists an allocation rule satisfying ‘individual rationality’, ‘efficiency’, and ‘strategy-proofness’, then for any problem for which the gamma-core is non-empty, the allocation rule must choose a gamma-core allocation and all agents are indifferent between all allocations in the gamma-core. We apply our result to housing markets, coalition formation and networks.

Segregation unter Stagnationsbedingungen

Anlass der Untersuchung sind Verstärkungen von strukturwandel- und globalisierungsbedingten Wandlungen unter Schrumpfungs- und Stagnationsbedingungen. Denn Stagnations- und Schrumpfungstendenzen in einer Region sind selektiv, sie begünstigen über verschiedene Mechanismen Polarisierungen und Marginalisierungen: Die allgemeine Entspannung am Wohnungsmarkt hat erhöhte Mobilität und damit sozialräumliche Segregierungen und Polarisierungen der Wohnungsversorgung zur Folge. Leerstände und ausbleibende Investitionen begünstigen Polarisierungen von baulich-räumlichen Qualitäten. Diese beiden Entwicklungen überlagern sich im Stadtraum und verstärken sich gegenseitig. Dabei verbessert sich die Wohnungsversorgung in den benachteiligten Quartieren kaum, so die Ausgangshypothesen. Die Untersuchung fragt nach den Wirkungen des Nebeneinanders von Wachstums-, Stagnations- und Schrumpfungserscheinungen auf unterschiedlichen Maßstabsebenen, dem Zusammenspiel von sozialstrukturellen und qualitativen Veränderungen der baulich-räumlichen Gegebenheiten in den Quartieren sowie in innerstädtischer Differenzierung. Dabei interessieren besonders die Einflüsse eines regional entspannten Wohnungsmarktes und dessen Folgen für die Verwertungsstrategien im Wohnungsbestand auf Segregationsprozesse und die Wohnungsversorgung. Als Fallbeispiel der Untersuchung dient die Stadt Kassel. Der sozialräumliche Fokus liegt auf drei Typen benachteiligter Quartiere: Neben den in der aktuellen Diskussion zumeist betrachteten gründerzeitlichen Arbeiterquartieren und den Großsiedlungen der 1960/70er Jahre wurden auch die peripheren Geschosswohnungsbausiedlungen der 1950er/60er Jahre in die Untersuchung einbezogen, um den unterschiedlichen Rahmenbedingungen und Wirkungen in den Quartierstypen auf die Spur zu kommen und damit letztlich Grundlagen für stadtentwicklungspolitische Strategien zu erarbeiten. Die kleinräumigen Analysen von sozialräumlicher und baulich-räumlicher Struktur sowie zur Wohnungsversorgung deckten Parallelen und gegenläufige Entwicklungen zwischen den unterschiedlichen Quartierstypen auf; es ergaben sich verschiedene Anhaltspunkte zur Erhärtung der Ausgangsthesen. So wurde z.B. deutlich, dass sich unter den Marktbedingungen stagnierender Städte die Wohnflächenversorgung in den benachteiligten Quartieren kaum verbessert. Hierin zeigt sich ein entscheidender Unterschied zu stark schrumpfenden Städten, in denen sich die Versorgungslage (fast) durchgängig verbessert. Wohnungsmarktbarrieren wirken offensichtlich unter Stagnationsbedingungen für bestimmte Bevölkerungsgruppen weiter. Da sich ihre Wirkung aber für weitere Kreise der Bevölkerung abschwächt, verschärfen sich sozialräumliche Konzentrationen. Vor allem aber wurden Überlagerung und gegenseitige Verstärkung dieser sozialräumlichen mit baulich-räumlichen Polarisierungen deutlich, die vor allem aus stadträumlich konzentrierten Investitionen in den Gebäude- und Wohnungsbestand resultieren. Letztlich zeigt sich damit, dass regulierende Eingriffe nicht nur im Rahmen des Umbaus und der Erneuerung der Quartiere erforderlich sind, sondern insbesondere auch in den Wohnungsmarkt und dies auch bei entspannter regionaler Marktlage. Andernfalls ist weder eine angemessene Wohnungsversorgung aller Bevölkerungsgruppen noch der Zusammenhalt der Stadt(Gesellschaft) zu gewährleisten. Dabei ist die Stadtpolitik permanent mit der Gleichzeitigkeit von (wirtschaftlicher) Standortpolitik und sozialer Stadtentwicklung konfrontiert, die sie im Sinne einer nachhaltigen Entwicklung gegeneinander und miteinander abwägen muss.

The distribution of London residential property prices and the role of spatial lock-in

Much of mainstream economic analysis assumes that markets adjust smoothly, through prices, to changes in economic conditions. However, this is not necessarily the case for local housing markets, whose spatial structures may exhibit persistence, so that conditions may not be those most suited to the requirements of modern-day living. Persistence can arise from the existence of transaction costs. The paper tests the proposition that housing markets in Inner London exhibit a degree of path dependence, through the construction of a three-equation model, and examines the impact of variables constructed for the 19th and early 20th centuries on modern house prices. These include 19th-century social structures, slum clearance programmes and the 1908 underground network. Each is found to be significant. The tests require the construction of novel historical datasets, which are also described in the paper.

Cross-country effects of regulatory capital arbitrage

One reason for the recent asset price bubbles in many developed countries could be regulatory capital arbitrage. Regulatory and legal changes can help traditional banks to move their assets off their balance sheets into the lightly regulated shadows and thus enable regulatory arbitrage through the securitized sector. This paper adopts a global vector autoregression (GVAR) methodology to assess the effects of regulatory capital arbitrage on equity prices, house prices and economic activity across 11 OECD countries/ regions. A counterfactual experiment disentangles the effects of regulatory arbitrage following a change in the net capital rule for investment banks in April 2004 and the adoption of the Basel II Accord in June 2004. The results provide evidence for the existence of an international finance multiplier, with about half of the countries overshooting U.S. impulse responses. The counterfactual shows that regulatory arbitrage via the U.S. securitized sector may enhance the cross-country reallocation of capital from housing markets towards equity markets.

House price dynamics in Panama City

In this paper, we analyze the drivers of the housing markets in Panama City. To the best of our knowledge, no formal academic analysis has been documented on the Panamanian housing market. In this paper, we outline key unique characteristics of the market and provide a brief review of broader economic indicators and housing market literature. Using a unique dataset comprising property-level information over 2007–2014, we employ a hedonic modeling framework to analyze the impacts of certain amenities and drivers that may affect housing values. The results indicate several unique features of the Panamanian housing market.

What drives household consumption in the EU-28? ECRI Commentary No. 19, 4 December 2015

Given that final consumption of households has contributed on average to broadly 60% of EU-28 GDP since 2001, an assessment of the drivers behind its dynamics is quite timely in a context of gradual economic recovery. The empirical analyses presented in this ECRI Commentary, covering 19 of the EU-28 economies, suggest that disposable income of households, consumer credit markets and the developments in housing markets have had a significantly positive impact on the growth of household final consumption since 2001. On the other hand, demographic trends do not seem to have played any significant role.

Análisis crítico de la planificación urbana de la Ciudad de Cuenca

Las ciudades de todo el mundo deben mantener un entorno urbano habitable. Nueva York y Barcelona fueron una vez ejemplos a seguir, pero la visión urbana de expansión durante las últimas décadas ha dado lugar a un paradigma que comprende pobremente las tendencias de desarrollo de finales del siglo 20 e inicios del siglo 21. La planificación urbana insuficientemente pondera las aspiraciones de los ciudadanos y las funciones socioeconómicas de la ciudad, generando desequilibrios, caracterizados por el aumento de congestiones de tráfico, injusticia social y económica, y degradación medioambiental. En el caso de la ciudad de Cuenca, el desarrollo urbano ilustra claramente una expansión deficientemente controlada con graves fricciones en los mercados de trabajo y de vivienda, con pocos espacios verdes dentro y alrededor de la ciudad, como fue en el pasado. Este estudio intenta ilustrar la discrepancia entre la teoría y la práctica en el campo de la planificación urbana utilizando como caso de estudio a la ciudad andina de Cuenca. Mientras que la nueva doctrina de planificación urbana habla de un intrincado equilibrio entre las funciones socioeconómicas y ambientales en el espacio urbano, la ciudad se ve cada día más desorganizada. Además, para explicar la situación actual de la planificación de la ciudad de Cuenca, basada en razones teóricas y filosóficas, se identificaron las deficiencias en la planificación urbana. Las buenas prácticas de diseño y planificación urbana deben basarse en una buena comprensión del carácter dinámico y complejo de las ciudades. Con el manuscrito el autor tiene como objetivo impulsar la discusión científica sobre la planificación urbana desde la visión medioambiental y sustentable.