Housing service are enormously subsidized in the Netherlands (e.g. Conijn, 2008). Home-owners are... more Housing service are enormously subsidized in the Netherlands (e.g. Conijn, 2008). Home-owners are subsidized mainly through mortgage interest deductibility and tax free capital gains over home equity. Renters receive two kinds of subsidies in the Netherlands: first, there is an income dependent housing allowance to support low income households. Second, there is an implicit subsidy that results from i) rent regulation and ii) rent setting behavior of dominant market players. Koning et al. (2006) and Romijn and Besseling (2008) report that in each sector housing was subsidized for over 14 billion euro in 2006. The extensive subsidization of housing services has strongly disruptive effects on the housing market (e.g. Conijn and Schilder, 2009). Recently the debate on housing market reforms has increased (partly) due to the strongly increasing government expenditures on mortgage interest deductions (Rouwendal, 2007). Spurred by this vivid debate on housing market reforms a number of studies have applied welfare analysis in the Dutch housing market. In general all studies report overconsumption of housing services, across all income groups and in both sectors of the market. Two sets of publications have recently been published concerning subsidization and housing demand. There is a series of papers by Ras et al. (2005, 2006) and Eggink et al. (2007) that model implications of several policy changes on housing demand. In these papers a regional constant quality price index is used to define housing demand. The other series of papers, including Koning et al. (2006) and Romijn and Besseling (2008), do not differentiate regionally. In our analysis we estimate demand curves using and comparing both approaches. Furthermore, we follow Ras et al. (2005, 2006) in applying a Heckman procedure for correcting for a non-random distribution of households over both sectors. We add to current literature by modeling explicitly the impact of home equity. There is a tax incentive to roll over (tax exempt) capital gains on owner-occupied housing into new dwellings. Hoyt and Rosenthal (1992)report increasing excess burdens with increasing incentives to roll over capital gains, even when controlling for other subsidizations of user cost of owning. By explicitly taking up home equity in our models we attempt to control for the impact that home equity has on the demand for housing services and thus on our welfare cost estimates.
PurposeThere is increasing debate about how to finance the increasing costs of our ageing societi... more PurposeThere is increasing debate about how to finance the increasing costs of our ageing societies. Much attention in Europe has recently focussed on the extent to which households would be willing to use home equity conversion products. The question to which extent home equity can contribute in financing the needs of elderly has been left unanswered. This study quantifies to what extent future income of elderly can be increased through home equity conversion for the case of The Netherlands.DesignFor a large sample of households that are either now or in the medium long run eligible for home equity conversion we estimate the amount of home equity that can be converted. We use a stochastic model to annuitize home owners’ potential income from home equity.FindingsThere are some groups of households that may substantially increase income at old age through home equity conversion. In general, however, the additional income generated from conversion is limited. This is the result of a significant asymmetry between real estate and financial markets. In the near future additional income from home equity conversion is further decreased as a result of a cohort effect: the future elderly are more highly leveraged than the current elderly. The outcomes are robust for different model assumptions.Social implicationsThe relatively little additional income to be generated from home equity conversion puts debate about financing welfare state arrangements into new perspective. The current popular idea in The Netherlands that welfare arrangements can be partially paid for by the elderly home owners themselves is proven to be false.
PurposeThis paper aims to present a model that analyses the value gap, the difference between vac... more PurposeThis paper aims to present a model that analyses the value gap, the difference between vacant possession value and tenanted investment value, for the houses of Dutch housing associations. The paper also aims to explore why the value gap is a structural phenomenon in The Netherlands and why it is an important factor contributing to the malfunctioning of the housing market. This gives an interesting expansion of the value gap theory.Design/methodology/approachBy using the well‐known concept of user costs and using market equilibrium as a reference, the model quantifies the influence of six factors that cause the value gap. This is done for The Netherlands in total and for each of the 452 housing associations separately.FindingsThe value gap between the owner‐occupied and the rental sector is immense. This is especially the case with the rented houses owned by the housing associations, constituting one‐third of the total housing stock. The vacant possession value of these houses is on average €151,000; the reported tenanted investment value is no more than €33,000. Important factors that are responsible for this gap are, on the one hand, the fiscal subsidies in the owner‐occupied sector and, on the other hand, rent control and the policy of the housing associations characterised by a low rent level and high maintenance and management costs.Originality/valueThis is the first paper that analyses and quantifies the factors contributing to the value lost by Dutch housing associations' operations.
Kemeny (1995) has drawn attention to the maturation process of the social housing sector. If the ... more Kemeny (1995) has drawn attention to the maturation process of the social housing sector. If the housing policy of a country gives the social housing sector opportunities to gain financial strength, to mature as Kemeny calls it, an integrated rental housing market may evolve in which the social sector can compete with the private housing sector. An advantage of this competion is that the private housing sector has less possibilities to gain surplus profits in a tight market. This paper discusses the theory of Kemeny and proposes a reformulation of the maturation process. An extension of the theory is needed to distinguish a dualist rental market which is dominated by the social rented sector and in which the private rented sector is marginalised For decades now, one of the characteristics of the Dutch housing policy has been that it has given the housing associations opportunities to become financially independent. Recent research of the Central Housing Fund (2010) shows that in gen...
Deze rapportage doet verslag van een korte studie naar de prijsontwikkeling op de markt van koopw... more Deze rapportage doet verslag van een korte studie naar de prijsontwikkeling op de markt van koopwoningen. Aanleiding hiervoor vormt een onderzoeksvraag van MAB bv. Omdat deze organisatie in toenemende mate betrokken is bij de ontwikkeling van koopwoningen, wenst zij inzicht te hebben in de prijsontwikkeling van koopwoningen. Centraal in de analyses staat de periode vanaf 1975 tot aan de tweede helft van 1995. Deze periode wordt gekenmerkt door een aantal duidelijke groei- en stagnatiefasen. In het onderhavige onderzoek worden verklaringen aangedragen voor de prijsontwikkeling van koopwoningen in de onderscheiden fasen. Deze kennis kan worden ingezet om ook mogelijke toekomstige ontwikkelingen te kunnen inschatten.
Proceedings of the 10th European Real Estate Society Conference - Helsinki, Finland, 2003
The Dutch social housing sector is relatively large, with a share of 35% of the total housing sto... more The Dutch social housing sector is relatively large, with a share of 35% of the total housing stock. Dutch housing associations have been financially independent since the middle of the nineteen-nineties. They now have to balance their role as property investors on the one hand, which means making a return on their investments, with their role as housing associations on the other hand, with responsibilities for the affordability and quality of social housing for lower income groups. In the latter role they are spending the money that has been earned in their role as investors. It is essential to distinguish between the two roles in order to develop performance indicators for the Dutch social housing sector. In 2002 the Aedex / IPD Social Housing Index was introduced. This index is a first step in the development of performance indicators. The Aedex Index is consistent with the other IPD indices and also takes into account the social role of the housing associations. Recently the Social Housing Central Fund has published rates of return for the social housing sector. The results of the Aedex Index and those of the Social Housing Central Fund differ substantially. In this paper we compare these methods. We will combine the advantages of both methods and propose an alternative way to develop performance indicators for the Dutch social housing sector.
PurposeThis paper aims to present a model that analyses the value gap, the difference between vac... more PurposeThis paper aims to present a model that analyses the value gap, the difference between vacant possession value and tenanted investment value, for the houses of Dutch housing associations. The paper also aims to explore why the value gap is a structural phenomenon in The Netherlands and why it is an important factor contributing to the malfunctioning of the housing market. This gives an interesting expansion of the value gap theory.Design/methodology/approachBy using the well‐known concept of user costs and using market equilibrium as a reference, the model quantifies the influence of six factors that cause the value gap. This is done for The Netherlands in total and for each of the 452 housing associations separately.FindingsThe value gap between the owner‐occupied and the rental sector is immense. This is especially the case with the rented houses owned by the housing associations, constituting one‐third of the total housing stock. The vacant possession value of these houses...
Het wegnemen van deze onzekerheid vereist brede maatschappelijke consensus over de lessen van de ... more Het wegnemen van deze onzekerheid vereist brede maatschappelijke consensus over de lessen van de financiële crisis ten behoeve van duurzame financiering van een stabiele woningmarkt. Doel van dit zes stappenplan is bij te dragen aan deze consensus. Het schetst een door een groot aantal economen onderschreven hervorming van de woningmarkt, hypotheekfinanciering en het fiscale stelsel.
Housing service are enormously subsidized in the Netherlands (e.g. Conijn, 2008). Home-owners are... more Housing service are enormously subsidized in the Netherlands (e.g. Conijn, 2008). Home-owners are subsidized mainly through mortgage interest deductibility and tax free capital gains over home equity. Renters receive two kinds of subsidies in the Netherlands: first, there is an income dependent housing allowance to support low income households. Second, there is an implicit subsidy that results from i) rent regulation and ii) rent setting behavior of dominant market players. Koning et al. (2006) and Romijn and Besseling (2008) report that in each sector housing was subsidized for over 14 billion euro in 2006. The extensive subsidization of housing services has strongly disruptive effects on the housing market (e.g. Conijn and Schilder, 2009). Recently the debate on housing market reforms has increased (partly) due to the strongly increasing government expenditures on mortgage interest deductions (Rouwendal, 2007). Spurred by this vivid debate on housing market reforms a number of studies have applied welfare analysis in the Dutch housing market. In general all studies report overconsumption of housing services, across all income groups and in both sectors of the market. Two sets of publications have recently been published concerning subsidization and housing demand. There is a series of papers by Ras et al. (2005, 2006) and Eggink et al. (2007) that model implications of several policy changes on housing demand. In these papers a regional constant quality price index is used to define housing demand. The other series of papers, including Koning et al. (2006) and Romijn and Besseling (2008), do not differentiate regionally. In our analysis we estimate demand curves using and comparing both approaches. Furthermore, we follow Ras et al. (2005, 2006) in applying a Heckman procedure for correcting for a non-random distribution of households over both sectors. We add to current literature by modeling explicitly the impact of home equity. There is a tax incentive to roll over (tax exempt) capital gains on owner-occupied housing into new dwellings. Hoyt and Rosenthal (1992)report increasing excess burdens with increasing incentives to roll over capital gains, even when controlling for other subsidizations of user cost of owning. By explicitly taking up home equity in our models we attempt to control for the impact that home equity has on the demand for housing services and thus on our welfare cost estimates.
PurposeThere is increasing debate about how to finance the increasing costs of our ageing societi... more PurposeThere is increasing debate about how to finance the increasing costs of our ageing societies. Much attention in Europe has recently focussed on the extent to which households would be willing to use home equity conversion products. The question to which extent home equity can contribute in financing the needs of elderly has been left unanswered. This study quantifies to what extent future income of elderly can be increased through home equity conversion for the case of The Netherlands.DesignFor a large sample of households that are either now or in the medium long run eligible for home equity conversion we estimate the amount of home equity that can be converted. We use a stochastic model to annuitize home owners’ potential income from home equity.FindingsThere are some groups of households that may substantially increase income at old age through home equity conversion. In general, however, the additional income generated from conversion is limited. This is the result of a significant asymmetry between real estate and financial markets. In the near future additional income from home equity conversion is further decreased as a result of a cohort effect: the future elderly are more highly leveraged than the current elderly. The outcomes are robust for different model assumptions.Social implicationsThe relatively little additional income to be generated from home equity conversion puts debate about financing welfare state arrangements into new perspective. The current popular idea in The Netherlands that welfare arrangements can be partially paid for by the elderly home owners themselves is proven to be false.
PurposeThis paper aims to present a model that analyses the value gap, the difference between vac... more PurposeThis paper aims to present a model that analyses the value gap, the difference between vacant possession value and tenanted investment value, for the houses of Dutch housing associations. The paper also aims to explore why the value gap is a structural phenomenon in The Netherlands and why it is an important factor contributing to the malfunctioning of the housing market. This gives an interesting expansion of the value gap theory.Design/methodology/approachBy using the well‐known concept of user costs and using market equilibrium as a reference, the model quantifies the influence of six factors that cause the value gap. This is done for The Netherlands in total and for each of the 452 housing associations separately.FindingsThe value gap between the owner‐occupied and the rental sector is immense. This is especially the case with the rented houses owned by the housing associations, constituting one‐third of the total housing stock. The vacant possession value of these houses is on average €151,000; the reported tenanted investment value is no more than €33,000. Important factors that are responsible for this gap are, on the one hand, the fiscal subsidies in the owner‐occupied sector and, on the other hand, rent control and the policy of the housing associations characterised by a low rent level and high maintenance and management costs.Originality/valueThis is the first paper that analyses and quantifies the factors contributing to the value lost by Dutch housing associations' operations.
Kemeny (1995) has drawn attention to the maturation process of the social housing sector. If the ... more Kemeny (1995) has drawn attention to the maturation process of the social housing sector. If the housing policy of a country gives the social housing sector opportunities to gain financial strength, to mature as Kemeny calls it, an integrated rental housing market may evolve in which the social sector can compete with the private housing sector. An advantage of this competion is that the private housing sector has less possibilities to gain surplus profits in a tight market. This paper discusses the theory of Kemeny and proposes a reformulation of the maturation process. An extension of the theory is needed to distinguish a dualist rental market which is dominated by the social rented sector and in which the private rented sector is marginalised For decades now, one of the characteristics of the Dutch housing policy has been that it has given the housing associations opportunities to become financially independent. Recent research of the Central Housing Fund (2010) shows that in gen...
Deze rapportage doet verslag van een korte studie naar de prijsontwikkeling op de markt van koopw... more Deze rapportage doet verslag van een korte studie naar de prijsontwikkeling op de markt van koopwoningen. Aanleiding hiervoor vormt een onderzoeksvraag van MAB bv. Omdat deze organisatie in toenemende mate betrokken is bij de ontwikkeling van koopwoningen, wenst zij inzicht te hebben in de prijsontwikkeling van koopwoningen. Centraal in de analyses staat de periode vanaf 1975 tot aan de tweede helft van 1995. Deze periode wordt gekenmerkt door een aantal duidelijke groei- en stagnatiefasen. In het onderhavige onderzoek worden verklaringen aangedragen voor de prijsontwikkeling van koopwoningen in de onderscheiden fasen. Deze kennis kan worden ingezet om ook mogelijke toekomstige ontwikkelingen te kunnen inschatten.
Proceedings of the 10th European Real Estate Society Conference - Helsinki, Finland, 2003
The Dutch social housing sector is relatively large, with a share of 35% of the total housing sto... more The Dutch social housing sector is relatively large, with a share of 35% of the total housing stock. Dutch housing associations have been financially independent since the middle of the nineteen-nineties. They now have to balance their role as property investors on the one hand, which means making a return on their investments, with their role as housing associations on the other hand, with responsibilities for the affordability and quality of social housing for lower income groups. In the latter role they are spending the money that has been earned in their role as investors. It is essential to distinguish between the two roles in order to develop performance indicators for the Dutch social housing sector. In 2002 the Aedex / IPD Social Housing Index was introduced. This index is a first step in the development of performance indicators. The Aedex Index is consistent with the other IPD indices and also takes into account the social role of the housing associations. Recently the Social Housing Central Fund has published rates of return for the social housing sector. The results of the Aedex Index and those of the Social Housing Central Fund differ substantially. In this paper we compare these methods. We will combine the advantages of both methods and propose an alternative way to develop performance indicators for the Dutch social housing sector.
PurposeThis paper aims to present a model that analyses the value gap, the difference between vac... more PurposeThis paper aims to present a model that analyses the value gap, the difference between vacant possession value and tenanted investment value, for the houses of Dutch housing associations. The paper also aims to explore why the value gap is a structural phenomenon in The Netherlands and why it is an important factor contributing to the malfunctioning of the housing market. This gives an interesting expansion of the value gap theory.Design/methodology/approachBy using the well‐known concept of user costs and using market equilibrium as a reference, the model quantifies the influence of six factors that cause the value gap. This is done for The Netherlands in total and for each of the 452 housing associations separately.FindingsThe value gap between the owner‐occupied and the rental sector is immense. This is especially the case with the rented houses owned by the housing associations, constituting one‐third of the total housing stock. The vacant possession value of these houses...
Het wegnemen van deze onzekerheid vereist brede maatschappelijke consensus over de lessen van de ... more Het wegnemen van deze onzekerheid vereist brede maatschappelijke consensus over de lessen van de financiële crisis ten behoeve van duurzame financiering van een stabiele woningmarkt. Doel van dit zes stappenplan is bij te dragen aan deze consensus. Het schetst een door een groot aantal economen onderschreven hervorming van de woningmarkt, hypotheekfinanciering en het fiscale stelsel.
Uploads