Barriers to Institutional Investment in Rental Housing: A Systematic Review of Market Risks

Housing practitioners and policy experts are advocating for an expansion in rental housing supply in contemporary cities around the world. The objective is to convince institutional investors to include rental housing investment in their investment portfolio to contribute to boosting housing supply. Unfortunately, the rental sector is characterized by numerous uncertainties and challenges, making it unattractive to institutional investors. With the growing attention to institutional investors in various housing market contexts, an understanding of the market risks (also known as barriers), is useful to inform future research and policymaking. Using a systematic literature review methodology, this paper synthesizes the extant literature on the market risks inhibiting institutional investment in rental housing. Findings reveal the following barriers: low profitability, non-progressive rent control policies, unclear target group for rented projects, poor landlord-tenant relations, inadequate property management and unreliable property market information. Among all the barriers identified, low profitability and inadequate property management had great influence on their investment decision. Firstly, institutional investors perceive rental housing investment as less profitable and unattractive in terms of project performance. Secondly, the lack of supporting structures for the property management sector contributes to derailing rental yields. The review also finds that the target group for rental projects are often vague especially for projects under government assistance. The rental sectors in many countries are confronted with numerous problems, some of which greatly inhibit institutional investors from investing in the rental asset. This paper concludes that, although the idea of expanding rental housing supply seems laudable, ignoring these problems may be detrimental to housing markets in the long run. Rental markets in many countries are volatile, and thus not ready to receive institutional investors fully into the sector. An expanded rental sector could be advanced if policy makers take the appropriate steps to resolve the identified challenges. Adequate structural preparations must also be made for large scale rental housing supply.

Research on Supply and Demand in the Primary Housing Market by Structurizing on the Basis of the Number of Apartments and Bedrooms

All the household sector throughout the Russian Federation needs to improve housing facilities. The objective of an optimally organized economic system of a state is to provide a state or market possibility for all the categories of citizens to meet their demand for housing. The aim of the research is to identify the necessary structure of market housing supply in terms of number of bedrooms. The supply and demand in the first housing market are analyzed in order to substantiate the developers’ shaping of the housing supply strategy. Structurizing on the basis of the number of apartments and bedrooms is emphasized. As a part of the research, the problem of finding the optimal living area allocated for apartments with different number of bedrooms was formalized and solved. Due to the solution, developers will be able to create a housing proposal, taking into account the number of bedrooms, аnd state government bodies will be able to plan construction orders for citizens supported by the government more accurately. It was recommended to include the calculation of the indicator «number of bedrooms per each member of the family» into the methods of calculating target indicators of the state program for the Irkutsk region «Available Housing» for 2019–2024 (into Part 3 «Target Indicators of the Subprogram «Housing Construction Support in the Irkutsk Region» for 2019–2024»).

Submission to the House of Representatives Standing Committee on Tax and Revenue’s inquiry into Housing Affordability and Supply

•There are more, bigger, better, dwellings per capita in Australia in 2021 compared to any point in history.•Multiple government inquiries at all levels over the past two decades have ostensibly sought to find the cause of house prices hidden in the pages of local zoning laws. •Dwellings are assets and are priced based on financial market conditions. •Density (dwellings per unit of land) and the rate of supply (new dwellings per period of time) are conceptually different but often confused in housing supply discussions.•This submission argues that market housing supply has exceeded household demand. State planning systems have flexibly accommodated new supply while regulating the location of different types of dwellings. •Compared to household incomes and rents, the cost of buying a home (measured by mortgage payments) in 2021 is historically cheap. This is due to lower interest rates and is why intercensal homeownership is expected to rise in 2021. However, asset price adjustments will mean that this situation will not persist. •Taxes on property are efficient and fair and do not add to housing costs but rather subtract from property values.•Affordable housing is cheap housing. Cheaper housing means lower rents and prices. Any “affordability” policy that reduces market prices will remove billions in landlord revenues each year, transferring that value to tenants, and trillions in housing asset values, with that value transferred to future buyers. •Fostering parallel non-market housing systems, just as public healthcare provides a non-market medical system, can be an effective way to improve housing affordability. •There are no local, international, or historical examples of planning reforms leading to cheaper housing. Indeed, a Productivity Commission review concluded “given the small size of net additions to housing in any year relative to the size of the stock, improvements to land release or planning approval procedures, while desirable, could not have greatly alleviated the price pressures of the past few years.” (p154)

The effects of tourism on housing prices: applying a difference-in-differences methodology to the Portuguese market

Purpose This paper aims to explore the effects of a surge in tourism short-term rentals (STR) on housing prices in municipalities within Portugal’s two largest Metropolitan Statistical Areas. Design/methodology/approach This study applies the difference-in-differences (DiD) methodology by using a feasible generalized least squares (FGLS) estimator in a seemingly unrelated regression (SUR) equation model. Findings The results show that the liberalization of STR had a significant impact on housing prices in municipalities where a higher percentage of housing was transferred to tourism. This transfer led to a leftward shift in the housing supply and a consequent increase in housing prices. These price increases are much higher than those found in previous studies on the same subject. The authors also found that municipalities with more STR had low housing elasticities, which indicates that adjustments to the transfer of real estate from housing to tourism were made by increasing house prices, and not by increasing supply quantities. Practical implications The study suggests that an unforeseen consequence of allowing property owners to transfer the use of real estate from housing to other services (namely, tourism) was extreme housing price increases due to inelastic housing supply. Originality/value This is the first time that the DiD methodology has been applied in real estate markets using FGLS in a SUR equation model and the authors show that it produces more precise estimates than the baseline OLS FE. The authors also find evidence of a supply shock provoked by STR.

Spatial Inequality in China’s Housing Market and the Driving Mechanism

Housing inequality is a widespread phenomenon around the world, and it varies widely across countries and regions. The housing market is naturally spatial in its attributes, and with the transformation of China’s urbanization, industrialization, and globalization, the spatial inequality in the housing market is increasingly severe. According to the geospatial differences in the housing market supply, demand, and price, and by integrating the influencing factors of economic, social, innovation, facility environment, and structural adjustment, this paper constructs a “spatial–supply–demand–price” integrated housing market inequality research framework based on the methods of CV, GI, and Geodetector, and it empirically studies the spatial inequality of provincial housing markets in China. The findings show that the spatial inequality in China’s housing market is significant and becomes increasingly serious. According to the study, we have confirmed the following. (1) Different factors vary greatly in influence, and they can be classified into three types, that is, “Key factors”, “Important factors”, and “Auxiliary factors”. (2) The spatial inequalities in housing supply, demand, and price vary widely in their driving mechanisms, but factors such as the added value of the tertiary industry, number of patents granted, and revenue affect all these three at the same time and have a comprehensive influence on the development and evolution of spatial inequalities in the housing market. (3) All the factors are bifactor-enhanced or non-linearly enhanced in relationships between every pair, and they are classified into three categories of high, medium, and low according to the mean of interacting forces; in particular, the factors of GDP, expenditure, permanent resident population, number of medical beds, and full-time equivalent of R&D personnel are in a stronger interaction with other factors. (4) Based on housing supply, demand, price, and their coordination, 31 provinces are classified into four types of policy zones, and the driving mechanisms of spatial inequalities in the housing market are further applied to put forward suggestions on policy design, which provides useful references for China and other countries to deal with housing spatial inequality.

GIS Based Multi-Criteria Land Suitability Assessment for Future Urban Development in The Country Park Peripheries of Hong Kong

In recent years, land supply in Hong Kong has fallen sharply and fails to keep pace with the growth of population and number of households. Land shortage becomes urgent and dire. With the inadequate provision of residential land, housing supply is also adversely affected.Insufficient housing supply leads to surging property and rental price in the private market. According to the Rating and Valuation Department (RVD), the overall private domestic price index peaked in June 2017 at 336.1. Keen housing demand is also observed in the private rental market. RVD statistics showed that the domestic rental index also reached the peak at 183.6 in June 2017 and the vacancy rate of about 3.8% as at the end-2016, which is much lower than the average vacancy rate of 5% from 1996 to 2015 (Development Bureau, 2017).In addition, there is soaring housing demand in public housing. As at the end-December 2021, the average waiting time for general applicants was 5.7 years, which is nearly double of the Housing Authority’s target for providing the first flat offer to general applicants at around three years on average (Housing Authority, 2021). Identifying and securing sufficient land to meet both current and anticipated pressing housing demand becomes a key challenge of the government. In the light of this, the government has established a dedicated task force (Task Force on Land Supply) in September 2017 and appointed 30 professionals from different disciplines, such as planning, engineering, academia and think tank, to take a Marco-review on the land supply sources, look for feasible options as well as consider the pros and cons of various options. 18 land supply options were worked out for the public to make choices in the public engagement exercise. Among the 18 choices, the development area on the Periphery of Country Parks was regarded as one of the land supplies sources. This option does not only include the Hong Kong Housing Society’s studies on developing Two Pilot Areas on the Periphery of Tai Lam and Man On Shan Country Parks, but also include developing more areas on the periphery of Country Parks. The proposed option received overwhelming attention from the public and aroused debates in various perspectives. Its ecological value, recreational value, financial viability and even legitimacy were discussed. However, spatial analysis on the suitability of having residential development in Country Parks has not been conducted. Therefore, in this study, multi criteria GIS analysis is conducted to evaluate the geographic suitability of Hong Kong Country Parks for residential purpose with the consideration of various criteria.