Browsing by Subject "unemployment rate"

Urbanization is one of the megatrends of our time. Urbanization means that the cities have become more substantial and more critical economic centers. City population had an increasing trend both in Stockholm and Helsinki for the years 1990–2019. Migration has been one of the factors driving this urbanization process. Increased attractivity of the urban housing leads to an increased demand for urban housing which affects the urban housing market dynamics. Stockholm and Helsinki, as metropolitan cities, had an increasing trend to the real house prices of the old apartments for most of the years 2005–2019. The primary purpose of the study is to test whether excess migration explains the real house prices. Moreover, the role of the real income per person, the real interest rate, the new apartment construction, and the unemployment rate for the house prices is examined. House prices are linked to the household wealth and the private consumption. Besides, the house prices affect people’s ability to move into new areas for receiving a new job. In the empirical part, the house price determinants for the old apartments are examined by adapting a two-stage least squares model for the panel data from Stockholm and Helsinki for the years 2005–2019. Overall, the observation period comprises a timeframe of almost the two first decades of the millennium era starting from the aftermath of the Tech bubble. Furthermore, this period includes the global financial crisis in the year 2008 and European debt crisis that began in the year 2010. The adapted data of the house prices, excess migration, real income per person, the new completed apartments, and the unemployment rate are on the municipality level data. The real interest rates are computed from the national level data from Sweden and Finland, except for the 6 months EURIBOR that is data from the euro area level. The data is provided by Valueguard, Statistics Sweden, Statistics Finland, OECD, and the City of Helsinki. The empirical results strongly indicate that the real interest rate and the real income per person affect the house prices of the old apartments in Stockholm and Helsinki in the years 2005–2019. However, the empirical results do not give a statistically significant estimate to the role of the excess migration to explaining the house prices. Furthermore, the estimates for the new completed apartments and the unemployment rate are statistically insignificant that hampers the analysis of for these determinants as explanatory variables for the house prices. The empirical findings about the role of the real income affecting the house prices are in line with the previous findings from the Swedish and Finnish housing markets. Moreover, the previous findings from the Finnish housing markets support the finding of the real interest rate affecting the house prices. The empirical findings underline the importance of the availability of the macroprudential tools for preventing a possible overheating of the housing markets at the low interest rate environment. Furthermore, the findings highlight the need to closely monitor the household indebtedness and the share of the household income that is used to the loan instalments. Furthermore, the results lead to ask, whether the housing markets are capable of supporting migration to these cities from the areas where the real income level is smaller compared with Stockholm and Helsinki for taking a job.