Geographic and dynamic heterogeneity of home ownership

Abstract

This paper analyses the determination of the demand for home ownership. The determinants include prices and short- and medium-term price changes, public regulation (regulation of house rent, housing subsidies, taxation), competition from alternative residence forms (measured by supply of subsidised housing), social composition of population (age, social benefit recipients, household composition, civil status, education, nationality), economic ability (income), and congestion (measured by population density and degree of urbanisation). The study applies Danish aggregate data for 270 Danish municipalities, available annually for the period 1999–2004. The effects of determinants on home ownership rates are allowed to be heterogeneous by years and municipalities using temporally and geographically expanded coefficients. Considerable parametric heterogeneity over time as well as across municipalities is found, even when residual dynamic heterogeneity and interdependency as well as residual spatial spillover is controlled for.