Advanced

Bostadspriserna och läget - tillämpning av den monocentriska stadsmodellen

Larsson, Patrik LU (2012) VFT920 20121
Real Estate Science
Abstract
Forecasts and analysis on real estate values and house prices are an ever-present problem for several different players. Often there is debate about the values of housing prices or housing bubbles in the Swedish cities. The difficulty with the valuation of housing, compared with other products, is their unique location. No housing is another comparable, and because of this there is no certain market value. The question is; what can explain the high housing prices in cities?

This work is based on a theory called the classic monocentric city model, which is a theory based on the city's original structures. The city has a center where all residents daily have to transport themselves to work so that they can meet their costs for housing... (More)
Forecasts and analysis on real estate values and house prices are an ever-present problem for several different players. Often there is debate about the values of housing prices or housing bubbles in the Swedish cities. The difficulty with the valuation of housing, compared with other products, is their unique location. No housing is another comparable, and because of this there is no certain market value. The question is; what can explain the high housing prices in cities?

This work is based on a theory called the classic monocentric city model, which is a theory based on the city's original structures. The city has a center where all residents daily have to transport themselves to work so that they can meet their costs for housing and other consumption needs. At the urban boundary of the city, the housing prices consist of land values in current use, ie agriculture or forestry, and construction cost of the residence. Those living at the urban boundary must pay to transport themself into the center, not just the actual cost but also the opportunity cost of time it takes. Citizens who settle in the center will then be prepared to pay more for housing because they do not have the transportation cost. Prices in the city thus contain a location price which increases the closer to the center the residence is located.

This work purposes to investigate whether the monocentric city model can be applied in Swedish towns and regions. It also aims to examine how the price structure looks like in Swedish cities, how the housing prices relate to the distance to the center of the city. Areas in Sweden are selected to carry out examinations and applying the model. The areas are Stor-Malmö, composed of 11 municipalities, and the cities Malmö and Lund.

A literature study is implemented for the purposes, which includes the theory of the monocentric city model, and various theories of valuation and pricing of homes. Based on the theories, hypotheses are set up that will be verified or shown to be false. The analysis is based on these hypotheses. The hedonic pricing model is used in the analysis. The regression analysis performed on the data sets consist of data from about 70% of the sales from the Swedish accommodation form bostadsrätt in the three areas, from the time 2008 to October 2011.

The results show that it is difficult to apply the monocentric city model. There are many factors that have affected the housing prices during the studied period, and therefore the hypotheses can neither be verified nor rejected. In the studied areas, there are several factors that affect the prices and also the regions are not fully monocentric. Despite this, the results show that there is a strong correlation between housing prices in the areas and a defined center in each area. The distance to the center explains much of the housing prices. The result should be possible to apply to other areas in Sweden.

In Lund, the location price of the property has increased in all of the studied years. In 2008 a housing cost 301 SEK more for every meter closer to the center the housing was located. As center of Lund, Stortorget is defined. In 2011 the price had risen to 358 SEK per meter. This means that a "normal housing" at 71 m2 with two rooms and a monthly fee of 3618 SEK, in 2011 cost about 2.1 million SEK if it is located at the center of Lund and about 700 000 SEK if it is located at the urban boundary of Lund, 4000 meters from the center. In Malmö, the location price is not as high, but it has, as in Lund, increased each year, from 144 SEK per meter 2008 to 190 SEK per meter of 2011. As center of Malmö, Stortorget is defined.

As the distance, several different measures can be used. When applying the monocentric model to the region Stor-Malmö, it is shown that the time to transport to the center is a better measure than a straight line to the center. The location has increased from about 36 000 SEK per minute in 2008 to about 42 000 SEK in 2011. As the center of Stor-Malmö, Stortorget is defined.

Although the distance to the center of a city can explain much of the housing prices, there are several other location factors affecting the price. The extent to which the distance to the center can be used as location variable will therefore depend on the size of the area and the wide of variations in different parts of the area. (Less)
Please use this url to cite or link to this publication:
author
Larsson, Patrik LU
supervisor
organization
course
VFT920 20121
year
type
H3 - Professional qualifications (4 Years - )
subject
keywords
Fastighetsmarknad, Bostadspriser, Monocentrisk, Stad, CBD, Hedonisk prissättningsmodell, Prisbildning
other publication id
ISRN/LUTVDG/TVLM /12/5243 SE
language
Swedish
id
2798842
date added to LUP
2015-01-29 14:29:06
date last changed
2015-01-29 14:29:06
@misc{2798842,
  abstract     = {Forecasts and analysis on real estate values and house prices are an ever-present problem for several different players. Often there is debate about the values of housing prices or housing bubbles in the Swedish cities. The difficulty with the valuation of housing, compared with other products, is their unique location. No housing is another comparable, and because of this there is no certain market value. The question is; what can explain the high housing prices in cities? 

This work is based on a theory called the classic monocentric city model, which is a theory based on the city's original structures. The city has a center where all residents daily have to transport themselves to work so that they can meet their costs for housing and other consumption needs. At the urban boundary of the city, the housing prices consist of land values in current use, ie agriculture or forestry, and construction cost of the residence. Those living at the urban boundary must pay to transport themself into the center, not just the actual cost but also the opportunity cost of time it takes. Citizens who settle in the center will then be prepared to pay more for housing because they do not have the transportation cost. Prices in the city thus contain a location price which increases the closer to the center the residence is located. 

This work purposes to investigate whether the monocentric city model can be applied in Swedish towns and regions. It also aims to examine how the price structure looks like in Swedish cities, how the housing prices relate to the distance to the center of the city. Areas in Sweden are selected to carry out examinations and applying the model. The areas are Stor-Malmö, composed of 11 municipalities, and the cities Malmö and Lund. 

A literature study is implemented for the purposes, which includes the theory of the monocentric city model, and various theories of valuation and pricing of homes. Based on the theories, hypotheses are set up that will be verified or shown to be false. The analysis is based on these hypotheses. The hedonic pricing model is used in the analysis. The regression analysis performed on the data sets consist of data from about 70% of the sales from the Swedish accommodation form bostadsrätt in the three areas, from the time 2008 to October 2011.

The results show that it is difficult to apply the monocentric city model. There are many factors that have affected the housing prices during the studied period, and therefore the hypotheses can neither be verified nor rejected. In the studied areas, there are several factors that affect the prices and also the regions are not fully monocentric. Despite this, the results show that there is a strong correlation between housing prices in the areas and a defined center in each area. The distance to the center explains much of the housing prices. The result should be possible to apply to other areas in Sweden.

In Lund, the location price of the property has increased in all of the studied years. In 2008 a housing cost 301 SEK more for every meter closer to the center the housing was located. As center of Lund, Stortorget is defined. In 2011 the price had risen to 358 SEK per meter. This means that a "normal housing" at 71 m2 with two rooms and a monthly fee of 3618 SEK, in 2011 cost about 2.1 million SEK if it is located at the center of Lund and about 700 000 SEK if it is located at the urban boundary of Lund, 4000 meters from the center. In Malmö, the location price is not as high, but it has, as in Lund, increased each year, from 144 SEK per meter 2008 to 190 SEK per meter of 2011. As center of Malmö, Stortorget is defined. 

As the distance, several different measures can be used. When applying the monocentric model to the region Stor-Malmö, it is shown that the time to transport to the center is a better measure than a straight line to the center. The location has increased from about 36 000 SEK per minute in 2008 to about 42 000 SEK in 2011. As the center of Stor-Malmö, Stortorget is defined.

Although the distance to the center of a city can explain much of the housing prices, there are several other location factors affecting the price. The extent to which the distance to the center can be used as location variable will therefore depend on the size of the area and the wide of variations in different parts of the area.},
  author       = {Larsson, Patrik},
  keyword      = {Fastighetsmarknad,Bostadspriser,Monocentrisk,Stad,CBD,Hedonisk prissättningsmodell,Prisbildning},
  language     = {swe},
  note         = {Student Paper},
  title        = {Bostadspriserna och läget - tillämpning av den monocentriska stadsmodellen},
  year         = {2012},
}