Housing Tenure and Informational Asymmetries
2016 (English)Report (Other academic)
The paradigm shift of focus from rental apartments to owner occupied units on the Swedish property market has led to a substantial number of rental apartments being converted to cooperative apartments. Such conversions typically are done at prices far below market value. This provides a setting with strong financial incentives for tenants involved in such a conversion to take advantage of their informational advantage regarding the financial management of a cooperative, as compared to less informed neighbors and buyers on the general market. This setting also provides a reliable way of estimating the persistence and effects of such an informational asymmetry through nearly 200,000 apartment transactions in Stockholm, Sweden during the period of 2005 to mid-2014. We find strong support towards a behavior concurrent with moral hazard; as such insiders mismanage the cooperatives by setting monthly fees artificially low in order to increase the probability of a conversion as well as apartment values. Lastly, market participants seem to discount this informational asymmetry as recently converted apartments sell at lower prices.
Place, publisher, year, edition, pages
Stockholm: KTH Royal Institute of Technology, 2016. , 23 p.
, Working Paper Series, Department of Real Estate and Construction Management & Centre for Banking and Finance (cefin),, 16:3
Informational Asymmetries, Real Estate, Housing Tenure
Economics and Business
Research subject Real Estate and Construction Management
IdentifiersURN: urn:nbn:se:kth:diva-183015OAI: oai:DiVA.org:kth-183015DiVA: diva2:906634
QC 201603022016-02-242016-02-242016-03-02Bibliographically approved