Finnish Homes—Through Passages or Traps?

Seppo Laakso and Heikki Loikkanen

Real Estate Economics, 1995, vol. 23, issue 4, 475-495

Abstract: This is a study of tenure choice, housing demand and mobility in the submarkets of the Helsinki metropolitan area. The empirical analysis is based on data on households, type of tenure, housing characteristics and mobility for a sample of Helsinki residents at the end of 1980s. According to our results the probability of owning is affected not only by user costs of alternative tenure forms but also by permanent income and demographic variables. Results from the tenure specific housing demand models indicate that there are non‐neutralities in the housing markets. Permanent income elasticities of housing demand are clearly positive in owner‐occupied sector and systematically higher than in the rented sector. The demand for owner‐occupied housing depends very strongly on the age of the household head. User cost per housing unit affects housing demand negatively in both tenure forms. Effective demand is greater in private housing sector. The results suggest that owner‐occupied living is preferred with heavily subsidized households the least likely to move. In the rental sector, where the probability of moving is higher, it is also true that the most heavily subsidized households are the least likely to move.

Date: 1995
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