Concluding remarks

Stockholm’s real estate market has had a rich history. There were long periods of stagnating prices and decades of enduring growth. On multiple occasions, explosive price growth has been followed by severe downfalls, sometimes with a great impact on the real economy.

In order to situate all these cases, a long-run perspective is needed. The first two articles in this thesis both make this point explicit. Our impressions of the present time as historically unique because of the rapid growth – an interpretation accentuated by the claims that house prices have followed a hockey stick pattern – may not be as obvious when we reach back in history and construct longer series that also covers the nineteenth century.

The main contribution of articles 1 and 2 is that they provide new price indices. The stylized facts from these indices challenge established impressions of the long trajectory of real estate prices, as discussed above. The articles contribute to the source-critical and methodological challenges that arise when constructing such indices. These insights will be fruitful for any future researchers that seek to conduct similar studies on other cities. Lastly, the new indices will be a great resource for researchers who are looking to incorporate real estate prices in their analyses. For the present, we have only scratched the surface of how these prices interact with financial markets, the

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real economy, and demographic developments. For such analyses to be possible without relying on anecdotical argumentation, this kind of basic research must first be conducted.

The third article focuses on long-run trends, turbulence, and exuberance in Stockholm’s real estate prices. It is therefore the first to systematically make use of the indices presented in articles 1 and 2 . It finds that severe price declines have been a recurrent phenomenon. There are indications that these downfalls under certain circumstances co-varies with the construction sector.

The article locates the most severe periods of turbulence to the late nineteenth century and to the crisis around 1990 and lends support to claims in the financialization literature that the era before the World wars shows some common characteristics with today's liberalized financial environment.

In a famous study, the economist Hyman Minsky asked the question: “Can

‘it’ happen again?”, with “it” referring to financial crisis. Now we cannot foresee the future by studying history, but history may provide us with some hints. Article 3 shows that exploding housing prices typically are followed by severe price declines falls. One of the first ones happened only 30 years ago.

Over the last decade, we have witnessed real estate values showing signs of exuberance.

More research is needed on this topic. First of all, even if long time perspectives allow for the analysis of many different kinds of periods, this study has been confined to only one city. Given the scarcity of long-run series for other cities, that we only have a handful of indices for the time before the year 1900, this one-city study is significant. It suggests common characteristics between time periods that add to our knowledge of the present.

It hints at results that might come up when more cities are included in the analysis. More studies of additional cities will allow for panel data approaches to this important topic.

Gathering the data for this thesis has been very time-consuming. What might be missing is analyses that make use of other variables, for instance, real estate price fundamentals in the article on exuberance. That would on the other hand run into the problem of finding of both good quality and either geographically restricted to Stockholm or processed so that it can be used to estimate the conditions in Stockholm. In the end, such an endeavor was not possible to undertake within the framework of this thesis. A future research project could make use of the data presented here to further deepen our understanding of the historical trajectory of Stockholm’s real estate market.

If the third article is mainly concerned with the risk of price declines, articles 4 and 5 looks at which groups had the opportunity to take part in the early modern real estate market. In the long run, those were the groups that had the possibility to gain financially from price increases and streams of income such as rents.

Article 4 looks into gender patterns. It confirms recent research claims that the marital status of women is of great importance when looking into their

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economic position. Furthermore, it finds that never-married women – once called spinsters – seem to have strengthened their independence, placing them closer to widows in terms of economic freedom.

When looking into the class composition of buyers and sellers of real estate in early modern Stockholm 1730–185, the theme of article 5, we notice striking stability. The real estate market was dominated by the upper class, merchants, and artisans and this did not change substantially between 1730 and 1850. A major change was in the market share of the nobility, which decreased over the period.

Real estate prices increased faster than incomes for most of the period. This must-have increased the role of inheritance played in the ability to buy property. During the years studied, inequality in real estate wealth decreased as the objects sold probably became more homogeneous. However, we can assume that this equalizing effect was counteracted on a societal level by the rising gap between prices and incomes.

While the subjects covered in the five articles are very broad, they are not conclusive. There will always be room for new studies. The thesis contributes to discussions about financial fragility and wealth inequality.

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