Thursday 26th 13.00 – 15.30 Track 2

Urban housing markets

Housing supply and neighbourhoods

13.00 – 13.30 Supply elasticities
– Nini Barth

The population in the 10 largest municipalities in Norway has grown with 30 percent on average the last 10 years. How the supply side responds to the increase in demand for housing is essential for the house price growth in the cities. The local authorities are responsible for facilitating and regulating housing development. In Oslo, the capital, a single-family home costs 18 times the average household income in 2020, compared to 8 times in Bergen and Trondheim, the second and third largest municipalities. Growing house price
disparities between cities and urban-rural areas is not a Norwegian phenomenon and is widely documented in the literature.

In this paper, the supply elasticity is explored with respect to prices in different municipalities in Norway. Transaction data for sold homes is combined with data on construction costs from Norsk Prisbok, local housing stock from Ambita and local employment and building development from Statistic Norway for the 20 largest municipalities in Norway between 2003 and 2021. First, the average supply elasticity for the 20 municipalities in Norway is measured using changes in local employment as a measure of local demand shocks to instrument for changes in prices in the supply equation. Second, the Housing Facilitation Index developed by Benedictow 2022 is used and divide the municipalities into three categories: lenient, medium and strictly regulated, and measure the supply elasticity for these groups. Lastly, the supply elasticity for Oslo is estimated.

Nini Barth is a PhD candidate at Housing Lab. She works on topics related to the supply side of the housing market.

13.30 – 14.00 Floor area neutrality in the Norwegian dwelling stock- Synergies and challenges towards 2050
– Anne Sofie Bjelland

There is a pressing need to reduce our impact on nature and biodiversity. Land use change is one of the most significant impact factors on this development. There is an increasing interest in land degradation neutrality in Norwegian municipal planning, where future developments are increasingly focused on already-built areas. Norwegian housing developments amount to 22,4 % of the built areas in Norway and is thus a driver for land degradation. Most of the dwellings we will have in 2050 are already built, and we are currently in a time period where the many buildings built during the decades after the second world war need deep renovation and transformation to respond to current societal challenges. Norway has set a goal of becoming a low-carbon society in 2050, which entails an emission reduction of 90- 95 % compared to 1990- levels. The dwelling stock is also increasingly important for maintaining the Norwegian welfare state.

This article seeks to investigate the existing dwelling stock considering the need for sustainable development towards 2050. Needs are identified, and further, a scenario of floor area neutrality in the dwelling stock is explored. Floor area neutrality is understood as no increase in floor area in the dwelling stock towards 2050. Methods used are literature and document review to identify factors relevant to the sustainable development of the dwelling stock. Further descriptive statistics are used to investigate the current situation in the dwelling stock considering the factors identified in the literature and document review.

Finally, scenarios are developed based on two situations; “business as usual” projects the development in the dwelling stock if current trends are upheld using linear regression analyses. The case of area neutrality is also explored using Statistics Norway’s projections of demographic development towards 2050. The study points to several synergies between different needs in the dwelling stock by focusing on a reduction in floor space growth in the Norwegian dwelling stock towards 2050. It also argues that there is a need for increased focus on developing, adjusting, and rethinking existing dwellings to meet future needs. 

Anne Sofie H. Bjelland is a PhD candidate at the Building Institute at Western Norway University of Applied Sciences. She is part of the research group “Sustainable Transformation and Conservation of the built environment”. Her background is in building physics, energy efficiency, and urban planning.

14.00 – 14.30 Assessing housing supply in local markets
– Berit Irene Nordahl

The paper investigates the connection between the diversity and concentration of housebuilders in six Norwegian municipalities in the light of the local governments’ land-use policy. When firms build houses on private land, local governments’ influence on what and where to build is limited to land-use planning. Local governments are dependent on the willingness of housebuilders to produce homes fitting local demand. Thus, land use regulation, land
availability and housebuilders willingness constitute total supply response in local markets. The paper’s data consist of almost all apartments built from 2011 to 2020 in six Norwegian
municipalities. In the first step of the analysis, the marked share and the composition of the largest housebuilders in each local market is categorized. This composition is then reviewed in light of local land-use policy and local housing needs. Finally, the robustness of local housebuilders is examined, and the congruity of builders’ capability and planning objectives.

Key words:

  • Local housing markets
  • Land for housing
  • Housing supply
  • Urban planning

Berit Irene Nordahl is head of research at the institute for urban and regional research, OsloMet. Nordahl’s own research over housing policy, land for housing and land-use planning. Her interest covers supply side studies and together with colleagues she explores what a local perspective on supply and suppliers (developers composition) bring to the understanding of supply dynamics.

14.30 – 15.00 Socioeconomic segregation in the compact city: implications of marked-based densification
 Iselin Hewitt

Urban development in most western cities is today characterized by the combination of compact city policies and a more or less market-based housing system. Despite the association between urban sprawl and segregation in earlier periods of urban growth, it is not obvious that current policies produce more socially inclusive neighbourhoods. Studies and policy reports have highlighted the ‘dual challenge’ of affordable housing and compact urban development. Several reports also indicate that rich and poor households are increasingly sorted to different neighbourhoods, but there is little knowledge regarding concrete pathways through which segregation occurs. There is a risk that marked-based redevelopment and densification strategies can facilitate “green gentrification” and enhanced levels of segregation.

This paper explores how new-built housing affects economic differences within and between neighbourhoods. The research question is: How is the relationship between compact urban growth, and the planning policies that underlie such growth, and the level of socioeconomic segregation? To explore this question, Hewitt first asks if there is a difference in the level of segregation between densification areas and other areas. Secondly, how these potential differences can be associated with policy-related factors like building density and housing structure.

The analysis covers the capital region of Norway, the Oslo metropolitan area, and explores urban transformation and densification from 2000-2018. Hewitt use population data georeferenced by 100*100 meters grid cells, combined with detailed spatial data on land use and building structures. Socioeconomic segregation is measured for 2018 on a global level by the index of dissimilarity, and on the local level by the locational quotient for different income groups. Key explanatory variables are urban transformation and densification; building density; and housing structure, and Hewitt has used GIS to prepare variables based on individualized neighbourhoods. This gives opportunities to better identify the association between urban development and planning policies, and residential segregation. Implications of urban planning is an understudied field in research on segregation, despite the potential for knowledge relevant for policy development.

Iselin Hewitt is a doctoral research fellow in Human Geography at the University of Oslo. Her research focus on spatial analysis of social residential implications of urban development in the Oslo region. She has a background from the Urban Development Department in the City of Oslo.

15.00 – 15.30 Search Ripples in Urban Housing markets: The Quality-Location trade-off
– Mari O. Mamre, Norwegian University of Life Sciences & Bjørnar Kivedal, Oslo Metropolitan University and Østfold University College

The tendency of booms and busts in the housing market in many metropolitan areas has drawn attention to the potential for spatial ripples of buyers and housing prices. However, few studies consider the quality diffusion that may take place through the possibility to choose a lower-quality unit instead of a lower-quality location, when faced with rapidly increasing prices. Increased knowledge of this quality-location trade-off in local housing markets may lead to a better understanding of a range of urban issues such as spatial segregation, the quality of housing, and the fundamental drivers of local housing market equilibria.

This article study quality diffusion in housing search empirically during the period 2013-2019, including several booms and busts in three Norwegian cities, using fine-scale data on housing search and house transactions. We find evidence that search for lower-quality houses in more attractive locations within a metropolitan area is significantly procyclical while search for high-quality houses is countercyclical. During bigger booms the dispersion is greater, while during busts this ripple is reversed.
Based on VAR-analysis and Granger causality tests, the article also documents a co-movement of search and house prices by quality tier, where changes in search tend to lead changes in house prices. Combining these findings, we show that quality diffusion is expected to lead to increased price growth in attractive locations during booms.

Since most cities housing markets are complex systems of sub-markets with spatial patterning of housing qualities and price levels, our findings thus suggests that temporal variations in the demand for quality may provide a fundamental driving factor for variations in house price growth and the timing of house price booms across neighbourhoods.