Journal of Real Estate Finance and Economics, 15: 2, 193±217 (1997)
# 1997 Kluwer Academic Publishers
Housing Cooperatives in Sweden: The Effects of
Institute for Housing Research, Uppsala University, Box 785, 801 29 Ga
The article focuses on transaction prices for recent movers in cooperative dwellings during the period 1980±1993.
Prices increased by 80% in real terms up to 1990, then fell by 35% between 1990 and 1993. A hedonic analysis is
used to analyze the impact of changmg macroeconomics and ®nancial deregulation. The ®nancial deregulation,
which took place in 1985, seems to have caused increased loan-to-value ratios on the cooperative housing market.
Using 1983 as a point of reference, a Tobit analysis reveals that the average LTV ratio in 1990 was 290% higher
that year. After 1990 the LTV ratio fell by 45% due to credit constraints.
Key Words: housing ®nance, deregulation, house prices, cooperatives, loan-to-value
This article aims at shedding more light on the impact of credit market deregulation on
the housing market in Sweden. The main question is how the loan-to-value ratios on the
housing market changed as a result of a credit market deregulation in the early 1980s.
This period was followed by a price boom in the housing market from 1985 to 1990.
Related to this question is the issue of what happened to the loan-to-value ratios (LTV)
when house prices fell in the period 1991±1994. Did banks and mortgage institutions
constrain the supply of credit to the housing sector, and thus reduce the loan-to-value
This article is divided into four sections. The ®rst section contains background
information on credit deregulation, house prices, earlier studies of house lending, and
basic data on the housing market and housing policy in Sweden. It ends with a justi®cation
for the use of data from the cooperative housing sector in Sweden. It is hypothesized that
credit deregulation had a more immediate effect on lending to cooperatives than was the
case in the owner-occupied sector.
The second section analyzes price formation in cooperative dwellings. The aim is to
explain the price development that took place in the period 1985±1993, containing both a
boom and a bust period. A price index will be constructed, using a hedonic regression
technique. This has not been done before in Sweden.
The third section provides an analysis of the development in LTV for cooperative
dwellings. The hypothesis is that credit market deregulation did have an effect on
borrowing behavior, but the true effects cannot be relieved by using a traditional cross-
section analysis. The impact of wealth and capital gains in different periods of dwelling
price in¯ation has to be taken into account. The section concentrates on recent movers, to
focus on actual lending for dwelling purchases. This section employs household data, and