Disaggregation of Finnish Rental Markets – Empirical Evidence from Helsinki Metropolitan Area

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Journal ISSN
Volume Title
School of Business | Master's thesis
Date
2017
Major/Subject
Mcode
Degree programme
Finance
Language
en
Pages
71
Series
Abstract
The purpose of this study is to examine whether the rental market in Helsinki metropolitan area is formed of distinct segments of one-, two- and three-room apartments. Evaluation is conducted by comparing the determinants of net rental yield between these distinct apartment subgroups. Results are validated by examining the statistical significant model and coefficient difference between subgroup regression models. The novel data set employed in this study is received from multiple sources. Data of rental advertisements was received from Oikotie. Complementary data regarding apartment transaction prices and apartment characteristics was received from KVKL, data regarding apartment supply was received from Statistics Finland and the rest was obtained from public sources. Independent variables employed in this study to examine the net rental yield differences between the apartment subgroups cover apartment characteristics, location related variables, neighborhood related variables and a variable expressing the supply of new apartments in a postal code area. To examine the disaggregation of rental markets, the aggregated rental function is compared to distinct double-log regressions by apartment type. Moreover, the statistical significance between the regressions models and rental yield determinants is explored with a Chow-test and Tiao-Goldberger F-test. The results imply that the apartment rental market in Helsinki metropolitan area is disaggregated and the important rental yield determinants differ between apartment types. The distinct regressions for different apartments are statistically significantly different from each other and from the aggregated model. Key variables with different impact on rental yield between the apartment types, one-, twoand three-room apartments, are the size of apartment, the building year of the apartment, the apartment supply in postal code area and the proximity of closest university and metro station.
Description
Thesis advisor
Kaustia, Markku
Keywords
real estate, apartments, rental market, rental yield, submarket, disaggregated
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