Preference or policy?: A study to investigate factors that influence the preference and behaviour of first time buyers

First time buyers have an important role on the housing market. First time buyers namely determine a large proportion of the movements on the owner occupied market (Marwijk, Pellenbarg, & Ruiter, 2014, p. 7) and are necessary to create liquidity at the lower end of the owner occupied market (Neuteboom & Brounen, 2007). Currently first time buyers make limited movements , it is however unclear which factors shape preference and behaviour of first time buyers. In literature is found that household characteristics, market circumstances and policy can influence the preference and behaviour of first time buyers. The objective of this research is to investigate how factors related to household characteristics, housing market circumstances and policy interventions determine the preference and behaviour of first time buyers. The main research question is as follows: "How do household characteristics, housing market circumstances and policy interventions drive the preference and behaviour of first time buyers on the housing market?” Housing market circumstances and policy are different per region. Therefore one region is analysed to investigate the potential influencing factors; the municipality of Rotterdam. To be able to reflect on the market and policy changes, there will be reflected upon past developments. This research makes use of the WoON data sets, which are cross-sectional household surveys conducted every three years. By using the three most recent datasets this study investigates the time period 2007-2015. During this time period there have been quite some alterations with regards to the context of the housing market. Characteristic of this time period is the starting of the housing crisis. Also the municipality of Rotterdam changed its vision on housing, and there were changes in the mortgage provision conditions. In order to gain insight into preference and behaviour of first time buyers and movers throughout these different time periods descriptive analyses and categorical logistic regressions are carried out using the WoON data sets. This quantitative analysis is focussed on the preference and choice of households between different tenure forms of dwellings; the rental or owner occupied sector. There is also focused on the preference and choice for various price classes of owner occupied dwellings. With the analyses the relations between these two aspects and the household characteristics age, income and household composition are investigated. The descriptive analysis gave the first indication of the relations between household characteristics and preference and choice. These indications are used to construct categorical binary logistic regressions. With the logistic regressions the effect size of the relation between household characteristics and preference and choice can be better estimated. The research has shown that a part of the preference and behaviour of first time buyers on the housing market can be explained based on household characteristics. In general there is found that with a higher income, age or household size preference and behaviour are more likely to move towards the owner occupied sector and higher price segments. The preference of (potential) first time buyers and movers tends to be quite continuous over the investigated time period. Apparently the changing circumstances do not severely influence the preference of a household, for behaviour there is more variation found. The logistic models show that a large fraction of the behaviour cannot be explained based on household characteristics. The context under which households develop their preference and behaviour is of large importance. The behaviour of starters and first time buyers is more shaped by market, economic and policy context than the behaviour of movers. The policy measures of the different governmental layers have different effects. Central government mostly influences the relation between income and preference and behaviour. Policy measures of the local government are more diverse than solely financial implementations; with building programmes, campaigns and other measurers, they interfere on the housing market. The municipality has the ability to steer the housing market towards their vision and ambition. However it is not clear whether this interference of the municipality leads to a shift in the preference and behaviour of certain groups or leads to movements of these groups towards other regions. The potential influence of the local policy is a potential issue for the province as it might affect the match between supply and demand. However the province does not have the instruments to intervene when such a mismatch occurs. It could be either an option to expand the instruments of the province or to change the responsibilities of the province. All these different policy but also economic and market circumstances shape behaviour and preference. Thereby the context contributes to the inability to explain the preference and behaviour of households based on household characteristics. Potential first time buyers are, when making choices on the housing market, to a large extent shaped by context.Technology, Policy and ManagementSystems Engineering, Policy Analysis and Management (SEPAM