Sunday, November 16, 2014

Why housing subsidies fueling rising rents … – Boursier.com

Why housing subsidies fueling rising rents … – Boursier.com

(Boursier.com) – Housing assistance they are a source of tension in the rental market? In theory, APL, ALF and other ALS should enable recipient households to limit their financial commitment to housing or at least rate equal access to better housing stress …

5.7 million beneficiaries

In recent years, aid has also been greatly enhanced … A publication of INSEE analysis notes that 28 years, they have quintupled from $ 3 billion euros in 1984 to almost € 16 billion in 2012. By comparison, GDP has increased by 1.75 over the period, according to our calculations. The efforts of the State towards the tenants is greatly increased … One reason for the sharp rise in the number of beneficiaries in the early 1990. In 2012, approximately 5.7 million households have received housing assistance (1 home on 5).

Rents that increase …

However, according to the authors of the study, housing subsidies would not occur the expected effects. When driving households to seek better housing (with rate constant effort), they have the effect of increasing tenant demand … But if the offer does not fit, “aid instead of benefit recipients households may result in higher rents, “they say.

Far from sticking to make this assumption, the study provides an assessment of the inflationary impact of housing subsidies. It compares the period 2005-2012 the private rental market to that of Zone II Zone III. Zone II corresponds roughly to the cities of over 100,000 inhabitants and has increased relative to the Zone III (rest of the country) aid. To obtain comparable data, the study therefore focuses on cities around the threshold of 100,000 (both areas).



inflationary effect

It appears – all other things being equal – that the rent m (2) is greater than 5.3% in zone II. In contrast, the mean surface is lower (-2.3%), housing quality is comparable to that of Zone III and the share of private rental housing is hardly higher than in Zone III ( +0.3 point). So there would be a good inflationary impact of aid on rents. To support his claim, the study also cites work in France and in other countries (USA, UK, Finland) which lead to the same conclusions.

Only nuance, some of these studies quantify the share of aid is absorbed by higher rents. It fluctuated between 60% and 80%. In other words, aid benefit both their beneficiaries but to a limited extent …

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