Leasehold Status and Freehold Transactions Effect on Apartment Prices : A Quantitative Study on Cooperative Apartments in Stockholm Municipality

Abstract: By using transaction data of sold cooperative apartments in the municipality of Stockholm,Sweden, during the year 2021, we find that leasehold status has a statistically significant impacton apartment prices in the inner city of -3.6% and in the outer city of -6.8% when controllingfor conventional apartment characteristics and location in a hedonic model. We also find theremaining time of the ground leasehold contract to have a statistically significant impact of0.42% per additional year that remains until renegotiation. We also find that the impact ofground leasehold differs depending on location. Further, we find that freehold transactionswould impact the prices of apartments differently in the inner city compared to the outer city.Consequently, the necessary increases in the monthly fees to enable a freehold transaction aregreater in the inner city compared to the outer city in average in a scenario analysis. We add toprevious research by using more recent data and a wider geographical area. Last, we simulatethe impact on apartment prices if a housing cooperative bought the land. We find considerablevariation among housing cooperatives on leased land, for when a purchase would be profitable.