Demand for owner-occupied homes in Danish municipalities - a spatial analysis

Theories on determinants of demand for owner occupied homes are summarised. An operational model which can be applied for empirical testing of theory is established. The model is estimated using Danish data. Theoretical determinants of the demand for owner occupied homes include social composition of population (age, social benefit receivers, household composition, civil status, education, nationality), economic ability (income), public regulation (regulation of house rent, housing subsidies, taxation), competition from alternative residence forms (measured by supply of subsidized housing), and population density. The data to be applied are aggregate data for 270 Danish municipalities, available annually for the period 1994-2004. An initial model specifies that the effects of the determinants are constant during the period 1994-2004. Presence of non-linearity, time trends, parametric instability and spatial spill-over are investigated and accounted for. Upon these adjustment, the empirical results generally confirm that the impacts of these determinants correspond to theory.