Moving Chains Paper- offering new housing opportunities throughout Helsinki

City-wide effects of new housing supply:
Evidence from moving chains

by: Cristina Bratu, Oskari Harjunen, Tuukka Saarimaa*

We study the city-wide effects of new, centrally-located market-rate housing
supply using geo-coded total population register data from the Helsinki Metropolitan Area. The supply of new market rate units triggers moving chains that quickly
reach middle- and low-income neighborhoods and individuals. Thus, new marketrate construction loosens the housing market in middle- and low-income areas even
in the short run. Market-rate supply is likely to improve affordability outside the
sub-markets where new construction occurs and to benefit low-income people.

As far as why a paper, which many would think of as addressing common sense, needs to be written. This tweet best explains it best:

This might seem obvious if you’ve ever read the literature (this process is normally called ‘filtering’) or indeed if you’re a renter who has moved around a lot, but the theory gets a lot of critique from those who don’t like what it suggests about the need to build more…

… And because you need access to the whole population address history in order to *prove* that market supply frees up more affordable homes for lower income households, it’s hard for researchers to do (lack of data/privacy issues). So good to have this extra empirical evidence!

The paper also has some interesting findings on the role of social housing as well. Tl;dr all new housing supply has a good impact across the city. Lots of interesting charts too!

Get the feeling most of the people giving me reasons it’s wrong haven’t read the paper, since they are arguing against points that a) this paper doesn’t make, and b) are irrelevant to the findings of this paper 🙃

I’ve had people saying “housing in Helsinki is expensive, so this paper is wrong & we need socialism” AND “the reason housing in Helsinki is cheap is because of socialism”.

… the paper is not about what prices in Helsinki are. And it supports both market and public housing.

Originally tweeted by Anya Martin (@AnyaMartin8) on January 14, 2022.