Entrepreneur or Fool : A comparative study of the housing market in Stockholm and London

Abstract: During the past few years, the housing price has increased for both Sweden and the United Kingdom, and according to previous studies there can be many reasons for this development. The purpose of this study is to investigate the degree of differences and similarities between two housing markets. Specifically, this study explores how investors and buyers of housing acts on different markets, and how this changes the price development. The two regions this study focuses on are Greater Stockholm, in comparison with Greater London during the time period January 2005 until December 2018. The theories used are the Greater Fool theory and the Market Process theory, to analyze the result from the regressions run for this study. In the empirical study, time series were used, where several independent variables examined the potential connection to the housing price development. One time series was used for Greater Stockholm, and one time series for Greater London. The result of the study gave ambiguous indications, where most of the variables did not show statistical significance. This means that the change in these variables is not likely to affect the development of housing prices. While two variables for Greater London turned out to be statistically significant.