Christine Whitehead, Kath Scanlon, Michael Voigtländer, and others
LSE
2023
## 📊 Context The report titled "Financialization in 13 cities: an international comparative report" was published by the London School of Economics (LSE) in April 2023. It examines the financialization of housing markets in 13 cities worldwide, authored by a team that includes Christine Whitehead, Kath Scanlon, Michael Voigtländer, Jacob Karlsson, Fanny Blanc, and Martina Rotolo, alongside local experts. The document aims to provide insights into how financialization affects housing affordability and security in various urban settings. ## 🏙️ Key Findings ### Financialization and Its Global Impact Financialization has emerged as a critical concern in high-demand cities globally, where housing is increasingly viewed as an investment asset rather than a home. This shift has led to heightened housing costs and insecurity. The report highlights that the consequences of financialization differ significantly across countries, shaped by national policies and regulatory frameworks. ### 🌍 National Contexts of Financialization The report categorizes countries into four groups based on their approach to international finance and regulation: - Deregulated Markets: Includes the USA, England, Canada, and Hong Kong, characterized by limited regulation. - Owner-Occupation Dominant: Australia, New Zealand, and Singapore, where regulations restrict international investment. - Financially Open with Changing Regulation: Portugal and Spain, which are evolving toward increased regulation. - Strongly Regulated: Denmark, Sweden, Germany, and Ireland, known for robust rent regulations and security of tenure. ### 📈 City-Level Analysis Cities like Vancouver and Miami are heavily influenced by foreign investment, while others, particularly in Scandinavia and Germany, face challenges from private equity firms exploiting regulatory gaps. The report emphasizes that these cities experience rapid population growth, rising rents, and declining affordability. ### 🏡 Effects on Housing Markets The financialization of housing contributes to escalating prices and rents, exacerbated by swift demand changes and sluggish supply responses. Additionally, platforms like Airbnb further reduce the availability of long-term rental housing, complicating affordability issues. ### 📜 Anti-Financialization Policies Various government interventions are discussed, including rent regulations, restrictions on short-term rentals, changes to planning laws, and transparency measures for foreign buyers. These policies aim to mitigate the adverse effects of financialization on housing markets. ### 💼 Investor Perspectives The report also includes insights from major investors, who recognize both the potential benefits of financialization, such as efficiency and innovation, and its drawbacks, including increased housing costs and market volatility. ## 🔍 Conclusion The report concludes that financialization is a multifaceted issue with diverse impacts across different contexts. It underscores the necessity for tailored policies that balance economic efficiency with social equity and housing affordability.
LSE
Researchers, policymakers, urban planners, and housing advocates.
Context and Authors
The paper is an international comparative report on the financialization of housing markets in 13 cities across different regions, including Copenhagen, Stockholm, London, Dublin, Berlin, Barcelona, Lisbon, Vancouver, Miami, Singapore, Hong Kong, Sydney, and Auckland. It was authored by Christine Whitehead, Kath Scanlon, Michael Voigtländer, Jacob Karlsson, Fanny Blanc, and Martina Rotolo, with contributions from local experts in each city. The report was published in April 2023.
Key Findings
- Financialization and Its Impact: Financialization of housing has become a significant concern globally, particularly in high-demand cities. It involves treating housing more as an investment asset rather than a place to live, leading to increased housing costs and insecurity. The effects of financialization vary widely across countries and cities, influenced by national policies, regulatory environments, and international investment.
- National Contexts: Countries were categorized into four groups based on their openness to international finance and regulatory strength. These groups include:
- Deregulated Markets: The USA, England, Canada, and Hong Kong, which have open financial systems with limited regulation.
- Owner-Occupation Dominant: Australia, New Zealand, and Singapore, where owner-occupation is prevalent and regulations limit international investment.
- Financially Open with Changing Regulation: Portugal and Spain, which have been financially open but are increasing regulation.
- Strongly Regulated: Denmark, Sweden, Germany, and Ireland, known for strong rent regulation and security of tenure.
- City-Level Analysis: The report focuses on cities at the forefront of financialization debates. These cities often have growing populations, rising rents, and worsening affordability. While some cities are heavily influenced by foreign investment (e.g., Vancouver and Miami), others are impacted by private equity firms exploiting regulatory loopholes (e.g., in Scandinavia and Germany).
- Effects on Housing Markets: Financialization contributes to rising housing prices and rents, exacerbated by rapid demand changes and slow supply responses. Short-term letting platforms like Airbnb also reduce available long-term rental housing, further affecting affordability.
- Anti-Financialization Policies: The report discusses various government interventions aimed at mitigating the negative effects of financialization, including rent regulation, restrictions on short-term lets, changes to planning laws, and transparency measures for foreign buyers.
- Investor Perspectives: The views of major investors highlight both the benefits and drawbacks of financialization. While it can bring efficiency and innovation, it also leads to increased housing costs and market volatility.
Conclusion
The report concludes that financialization is a complex phenomenon with varied impacts across different contexts. It emphasizes the need for tailored policies to address the specific challenges faced by each city and country, balancing economic efficiency with social equity and housing affordability.