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Estimating stock and investment Estimating stock and investment of foreign dwellings of foreign dwellings

by Norwegian householdsby Norwegian households

by Wenche Irén Sterkeby

Agenda item 8

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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

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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:

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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

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• 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

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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

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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