Efficiency in the Social Housing Market: Comparative Perspectives on Austria and Denmark

Abstract

This paper examines the efficiency of the contemporary social housing systems in Austria and Denmark from a complex perspective. It sheds light upon the rarely studied market efficiency and financial efficiency of the social housing markets, with a special reference to how social housing contributes to affordable housing access and general housing market stability. Affordability, the core of both countries’ social housing system, is the dominant among four additional features of financial circuits used in this study as a framework for financial efficiency examination, whereas market efficiency is examined through the lens of the famous Efficient Market Hypothesis developed by Eugene Fama. Together, the two perspectives build a comprehensive picture of how these systems function. While the Danish social housing market resembles market efficiency and greater market stability, it exhibits weaker performance in terms of affordability as opposed to the Austrian social housing system. Municipal housing in Austria clearly represents an inefficient market, whereas the housing provided by the Austrian limited-profit market associations has a high resemblance to the real estate market and experiences greater fluctuations. These differences appear as a consequence of the divergent proportion of funding sources, differing management and different policies adopted by the states. The final chapters are dedicated to identifying which of the two social housing systems is the most efficient and what they could learn from one another, peripherally depicting the ideal combination for the best functioning social housing market.