Estimating stock and investment of foreign dwellings by Norwegian households

1
Estimating stock and investment of foreign
dwellings by Norwegian households
Agenda item 8

• by Wenche Irén Sterkeby

2
Introduction

• Households acquisition of foreign property is
  increasing
• Explanatory factors
• growth in households income
• more leisure
• higher accessibility of foreign property markets
• Difficulty of obtaining data
• Methodology to estimate foreign property
  investment
• Number and location
• Average prices
• Transactions of household investment in foreign
  property

3
Number of second homes abroad

• Year 2002 used as a benchmark
• An interview survey conducted in 2002
• 2 percent of Norwegian households have holiday
  homes abroad
• Yearly data is projected by extrapolating the
  2002 estimate with a volume index
• Index deduced from the Tax Return Statistics
  (Statistics Norway)
• The Statistics register the number of persons
  reporting ownership abroad
• Estimated number of Norwegian households that
  own a second home abroad

4
Location and prices of second homes abroad

• Location
• Founded on balance of payments data
• - Former international transaction reporting
  system
• Links households to
• - transactions in foreign estate
• - their countries of origin

5

• Average prices
• The property market is split into 5 sub-markets
• Official average dwelling prices used as a proxy
• Conversion of actual currencies to NOK
• The estimated number of households is divided
  according to the frequency distribution
• Stock (price) X (number of second homes)
• Total value of foreign dwellings owned by
  Norwegian households

6
Transactions in foreign property

• Difference between current and previous stock
  level
• E X Y, where
• Y revaluation effects
• X foreign property transactions
• Y E X
• Foreign property transactions
• Xcountry A (Nt, country A - Nt-1, country A) x
  Pt, country A
• Total foreign property transactions
• X XSpain XSweden XFrance XDenmark
  Xother countries

7
Summary

• The measurement in 2002 used as a benchmark
• Volume index based on yearly collected data
• Identified 5 property markets
• Derived a frequency distribution
• Official average dwelling price for each market
• Stock value (estimated number of
  homes)X(average price)
• Transaction is change in number of dwellings
  between two subsequent periods multiplied by
  current average price