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

Kód výsledku v 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>

Výsledek na webu

<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>

Jazyk výsledku

angličtina

Název v původním jazyce

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

Popis výsledku v původním jazyce

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

Název v anglickém jazyce

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

Popis výsledku anglicky

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

Druh

J_imp - Článek v periodiku v databázi Web of Science

CEP obor

—

OECD FORD obor

50401 - Sociology

Projekt

<a href="/cs/project/GA16-06335S" target="_blank" >GA16-06335S: Rizika a důsledky využití investic domácností do bydlení pro zvýšení příjmů v důchodovém věku</a><br>

Návaznosti

I - Institucionalni podpora na dlouhodoby koncepcni rozvoj vyzkumne organizace

Rok uplatnění

2020

Kód důvěrnosti údajů

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

Název periodika

Journal of Housing and the Built Environment

ISSN

1566-4910

e-ISSN

—

Svazek periodika

35

Číslo periodika v rámci svazku

1

Stát vydavatele periodika

NL - Nizozemsko

Počet stran výsledku

25

Strana od-do

1-25

Kód UT WoS článku

000515172000001

EID výsledku v databázi Scopus

2-s2.0-85064340517