Christine Whitehead, Kath Scanlon, Michael Voigtländer & others
LSE
2023
## 🌍 Context and Authors The report titled "Financialization in 13 cities: an international comparative report" was published by the London School of Economics (LSE) in April 2023. It explores the financialization of housing markets in 13 cities, including Copenhagen, Stockholm, London, Dublin, Berlin, Barcelona, Lisbon, Vancouver, Miami, Singapore, Hong Kong, Sydney, and Auckland. The authors of the report are Christine Whitehead, Kath Scanlon, Michael Voigtländer, Jacob Karlsson, Fanny Blanc, and Martina Rotolo, who collaborated with local experts in each city to offer a comprehensive analysis of the issue. ## 📈 Key Findings ### Financialization and Its Impact The report highlights that financialization of housing has emerged as a significant global concern, particularly in cities with high demand. This phenomenon involves viewing housing primarily as an investment asset, which leads to escalating housing costs and increased insecurity for residents. The effects of financialization vary widely based on national policies, regulatory environments, and the influence of international investments. ### 🏛️ National Contexts Countries were categorized into four groups reflecting their openness to international finance and the strength of their regulations: 1. Deregulated Markets: Includes the USA, England, Canada, and Hong Kong, characterized by open financial systems and minimal regulation. 2. Owner-Occupation Dominant: Comprising Australia, New Zealand, and Singapore, where homeownership is prevalent and regulations limit foreign investment. 3. Financially Open with Changing Regulation: Includes Portugal and Spain, which are becoming more regulated while remaining financially open. 4. Strongly Regulated: Denmark, Sweden, Germany, and Ireland, noted for strong rent regulations and security of tenure. ### 🏙️ City-Level Analysis The report provides insights into cities engaged in financialization debates, often marked by growing populations, rising rents, and diminishing affordability. Cities like Vancouver and Miami are heavily influenced by foreign investments, while others, such as those in Scandinavia and Germany, see private equity firms exploiting regulatory loopholes. ### 💰 Effects on Housing Markets Financialization has contributed to increasing housing prices and rents, exacerbated by swift demand changes coupled with slow supply responses. Additionally, platforms like Airbnb are reducing the availability of long-term rental housing, further impacting affordability. ### 🏛️ Anti-Financialization Policies The report discusses various government interventions aimed at mitigating financialization's adverse effects, including rent regulations, restrictions on short-term rentals, changes to planning laws, and measures to increase transparency for foreign buyers. ## 📊 Conclusion In conclusion, the report indicates that financialization is a multifaceted issue with varying impacts across different contexts. It underscores the necessity for tailored policies to address the specific challenges faced by each city and country, striving to balance economic efficiency with social equity and housing affordability.
LSE
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.