Increased Competition in the Swedish Housing Market and Its Effect on Rents and Quality of Housing Services for Households

Abstract

There has been a general trend in society during the last two decades towards privatization. Although privatization has been discussed for many years in Western Europe, the rental housing sector has not yet been affected very much, with the exception of the UK. This article utilizes empirical data to explore the effects on rents and quality of housing services of the privatization of apartments by municipal housing companies located outside metropolitan areas in Sweden. Quasi‐experimental methodology has been used, partly as a test of this methodology and partly because it was expected to yield better results in this context than traditional multiple regression methods. The development of the apartment stock in one town/city is compared with that in carefully selected comparison town(s). It appears that 2–5 years after privatization, rent development was lower in areas where apartments had been privatized. There are also indications that the development of the quality of housing services during the period investigated was dependent more on the specific housing company than on the type of owner (private or public). These data therefore indicate that public authorities should probably not be too worried about the short‐ and medium‐term effects of privatization if the buyer is carefully selected. However, data availability was limited and the results therefore need to be verified.