Small Area Variation in Homeownership

The aim of the study is two-fold. First, it adds to the existing state-of-the-art housing research by suggesting the implementation of new econometric methodology. Specifically, the study adds to earlier studies of homeownership by adding spatial impacts. It advocates simultaneous adjustment for intra-municipal correlation and heterogeneity as well as spatial spillover patterns between municipalities. It concludes that ignorance of controlling for intra-municipal correlation, heterogeneity and spatial spillover skews conclusions regarding effects of the determinants of homeownership. Furthermore, it finds that endogenous as well as exogenous spatial spillovers are essential parts of specifying demand for homeownership. Specifically, the demand for homeownership spills over and stimulates demand in neighbouring municipalities, and house prices and incomes exert positive effects on demand for homeownership in neighbouring municipalities. Second, as is clear from the above empirical conclusions, the study adds to existing empirical research and knowledge.