Impact of weak substitution between owning and renting a dwelling on housing market

Result code in IS VaVaI

<a href="https://www.isvavai.cz/riv?ss=detail&h=RIV%2F68378025%3A_____%2F20%3A00538566" target="_blank" >RIV/68378025:_____/20:00538566 - isvavai.cz</a>

Result on the web

<a href="https://link.springer.com/article/10.1007%2Fs10901-019-09661-3" target="_blank" >https://link.springer.com/article/10.1007%2Fs10901-019-09661-3</a>

DOI - Digital Object Identifier

<a href="http://dx.doi.org/10.1007/s10901-019-09661-3" target="_blank" >10.1007/s10901-019-09661-3</a>

Result language

angličtina

Original language name

Impact of weak substitution between owning and renting a dwelling on housing market

Original language description

According to economic theory, an economically rational market agent searching for permanent housing in a particular stage in his/her life cycle should base his/her tenure considerations also by comparing rent to the user costs of homeownership, and among flats with otherwise identical housing services and security will select the cheaper of two alternative tenures. Economic theory perceives rental and owner-occupied housing as ‘communicating vessels’—a change in conditions in one necessarily entails changes in the other. This is called the ‘substitution effect’ and represents an important balancing mechanismnin the housing market. Our hypothesis is that if the substitution between rental and owneroccupied housing in particular culture/society is weak, then the demand for owner-occupied housing becomes more income-elastic than vice versa. Consequently, in the case of a weak substitution effect, changes in house prices will closely mimic changes in household incomes, while in the case of a strong substitution effect this relationship will be much weaker. We confirmed our hypothesis by employing both a theoretical model and an empirical analysis of price data. If we assume poor responsiveness of housing supply, the main implication of our findings is that in societies with weak substitution effect between owning and renting we can expect higher house-price volatility and thus a higher chance ofnprice bubbles appearing.n

Czech name

—

Czech description

—

Type

J_imp - Article in a specialist periodical, which is included in the Web of Science database

CEP classification

—

OECD FORD branch

50401 - Sociology

Project

<a href="/en/project/GA16-06335S" target="_blank" >GA16-06335S: Housing Based Welfare: Risks and Implications of Release of Housing Wealth to Support Retirement Income</a><br>

Continuities

I - Institucionalni podpora na dlouhodoby koncepcni rozvoj vyzkumne organizace

Publication year

2020

Confidentiality

S - Úplné a pravdivé údaje o projektu nepodléhají ochraně podle zvláštních právních předpisů

Name of the periodical

Journal of Housing and the Built Environment

ISSN

1566-4910

e-ISSN

—

Volume of the periodical

35

Issue of the periodical within the volume

1

Country of publishing house

NL - THE KINGDOM OF THE NETHERLANDS

Number of pages

25

Pages from-to

1-25

UT code for WoS article

000515172000001

EID of the result in the Scopus database

2-s2.0-85064340517