The impact of leasehold status on apartment price
(2019) In Journal of Housing Economics 46.- Abstract
Based upon cooperative apartments sold in Stockholm, Sweden during the period of 2012 to mid-2014, we find that leasehold status (meaning that the cooperative does not own the land that the apartment building occupies) has a small but statistically significant impact on price of −2.3% when controlling for location and apartment characteristics in a hedonic model. At the time of renegotiation (i.e. a lease duration of 0), leasehold depreciates price with 4.2%. We also apply propensity score matching, which results in slightly larger negative impact on the price being estimated. As current lease payments are covered by monthly fees that are to be paid to the cooperative, a negative effect on price should mostly be attributed to an... (More)
Based upon cooperative apartments sold in Stockholm, Sweden during the period of 2012 to mid-2014, we find that leasehold status (meaning that the cooperative does not own the land that the apartment building occupies) has a small but statistically significant impact on price of −2.3% when controlling for location and apartment characteristics in a hedonic model. At the time of renegotiation (i.e. a lease duration of 0), leasehold depreciates price with 4.2%. We also apply propensity score matching, which results in slightly larger negative impact on the price being estimated. As current lease payments are covered by monthly fees that are to be paid to the cooperative, a negative effect on price should mostly be attributed to an increased uncertainty of future levels of monthly fees. We therefore extend the existing literature by examining the impact on price by the remaining leasehold term whilst still controlling for monthly fees. Consistent with our hypothesis, apartment prices are found to increase with 0.22% for each additional year that remains until renegotiation of the lease contract.
(Less)
- author
- Caesar, Carl ; Donner, Herman and Kopsch, Fredrik LU
- organization
- publishing date
- 2019
- type
- Contribution to journal
- publication status
- published
- subject
- in
- Journal of Housing Economics
- volume
- 46
- article number
- 101629
- publisher
- Academic Press
- external identifiers
-
- scopus:85063946111
- ISSN
- 1051-1377
- DOI
- 10.1016/j.jhe.2019.04.001
- language
- English
- LU publication?
- yes
- id
- 1c0c434c-6d4b-4884-a9af-9ef6339466ff
- date added to LUP
- 2019-05-08 14:28:57
- date last changed
- 2022-03-25 18:09:17
@article{1c0c434c-6d4b-4884-a9af-9ef6339466ff, abstract = {{<p>Based upon cooperative apartments sold in Stockholm, Sweden during the period of 2012 to mid-2014, we find that leasehold status (meaning that the cooperative does not own the land that the apartment building occupies) has a small but statistically significant impact on price of −2.3% when controlling for location and apartment characteristics in a hedonic model. At the time of renegotiation (i.e. a lease duration of 0), leasehold depreciates price with 4.2%. We also apply propensity score matching, which results in slightly larger negative impact on the price being estimated. As current lease payments are covered by monthly fees that are to be paid to the cooperative, a negative effect on price should mostly be attributed to an increased uncertainty of future levels of monthly fees. We therefore extend the existing literature by examining the impact on price by the remaining leasehold term whilst still controlling for monthly fees. Consistent with our hypothesis, apartment prices are found to increase with 0.22% for each additional year that remains until renegotiation of the lease contract.</p>}}, author = {{Caesar, Carl and Donner, Herman and Kopsch, Fredrik}}, issn = {{1051-1377}}, language = {{eng}}, publisher = {{Academic Press}}, series = {{Journal of Housing Economics}}, title = {{The impact of leasehold status on apartment price}}, url = {{http://dx.doi.org/10.1016/j.jhe.2019.04.001}}, doi = {{10.1016/j.jhe.2019.04.001}}, volume = {{46}}, year = {{2019}}, }