Abstract:

The model elaborated in this paper explores the interaction of Swedish rental and swap markets considering as well residential mobility. This is determined by the ratio of households in temporary versus permanent accommodation and by the size structure of permanent rental units.By calibrating the model to data on Swedish households that participated in swap transactions in 2016, the paper investigates the differential effects of swap markets on waiting times for permanent tenancy.The results show that active swap markets cause an increase in waiting time of outsiders (newcomers), i.e. in average for whole Sweden: 0.7 years for small dwellings and 0.9 years for big dwellings. The higher the ratio of households in temporary versus permanent accommodation, the longer outsider waiting times get with higher swap rates. Frictions in the swap market reduce these effects.However, at a very low ratio of temporary accommodation, outsider waiting time in rental market decreases and becomes insensitive to an increase in swap probability.At low intensity of moving shocks to households in permanent tenancy (insiders), they would cut waiting time for permanent accommodation if they swap their dwelling, rather than queue in the rental market.At high intensity of moving shocks, waiting time of insiders in the rental market decreases and approaches the waiting time in the swap market.

Keywords: house swap, search & match model, rental market, waiting time, access to housing, Sweden, size structure, temporary accommodation

JEL codes: D83, R23, R30, R31