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Working papers from the Economics Department of the OECD that cover the full range of the Department’s work including the economic situation, policy analysis and projections; fiscal policy, public expenditure and taxation; and structural issues including ageing, growth and productivity, migration, environment, human capital, housing, trade and investment, labour markets, regulatory reform, competition, health, and other issues.
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The Danish Housing Market
Less Subsidy and more Flexibility
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- Espen Erlandsen, Jens Lundsgaard, Felix Hüfner
- 08 Sep 2006
- Bibliographic information
While Denmark has fairly flexible labour and product markets in most respects, the housing market stands out with large direct and indirect subsidies for all types of housing and a highly regulated rental market hindering mobility, probably resulting in a mismatch between housing needs and use. In the current housing policy framework there is quite a contrast between the well-functioning market for transactions of owner-occupied housing (supported by the highly liberalised mortgage market) and the highly regulated rental housing market. This paper assess the recent development in Danish house prices, followed by a discussion of ways of replacing the costly government intervention in the Danish housing market with more market-based mechanisms, thereby achieving policy objectives in a more efficient and targeted way. The paper reviews the main areas for reform, including overall subsidisation of housing, rent regulation, social housing, and how housing supply could be made more responsive.
- rental housing, housing supply, mortgage markets, home owners, house prices
- JEL Classification:
- D12: Microeconomics / Household Behavior and Family Economics / Consumer Economics: Empirical Analysis
- D14: Microeconomics / Household Behavior and Family Economics / Household Saving; Personal Finance
- D61: Microeconomics / Welfare Economics / Allocative Efficiency ; Cost–Benefit Analysis
- E21: Macroeconomics and Monetary Economics / Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy / Consumption ; Saving ; Wealth
- E22: Macroeconomics and Monetary Economics / Consumption, Saving, Production, Investment, Labor Markets, and Informal Economy / Investment ; Capital ; Intangible Capital ; Capacity
- E39: Macroeconomics and Monetary Economics / Prices, Business Fluctuations, and Cycles / Other
- E51: Macroeconomics and Monetary Economics / Monetary Policy, Central Banking, and the Supply of Money and Credit / Money Supply ; Credit ; Money Multipliers
- H59: Public Economics / National Government Expenditures and Related Policies / Other
- R2: Urban, Rural, Regional, Real Estate, and Transportation Economics / Household Analysis
- R31: Urban, Rural, Regional, Real Estate, and Transportation Economics / Real Estate Markets, Spatial Production Analysis, and Firm Location / Housing Supply and Markets