Lower housing prices in areas that end up on the police list

When a residential area is listed as "vulnerable" by the police, it affects how the area is perceived, which in turn leads to a negative impact on housing prices. The police's reports about "vulnerable areas" have had a significant impact both in political debates and in the media.

– Several debaters have long pointed out that the lists can stigmatize and affect the areas negatively. So far, this has primarily been a hypothesis. We demonstrate in our empirical study that this claim also has some bearing in data. In the long run, this also has potential implications for individuals living in these areas. There are, for example, previous American studies that show that individuals living in areas that have a bad reputation have more difficulty entering into financial transactions. Such consequences are, of course, possible even in a Swedish context, says Henrik Andersson, a researcher at the Institute for Housing Research and affiliated with the Uppsala Immigration Lab.

Since 2015, the police have published reports in which about sixty areas are listed as "vulnerable," "risk areas" and "particularly vulnerable." Where an area ends up on the list depends on several different criteria, such as low socio-economic status and the presence of parallel social structures. Many municipalities actively work to improve vulnerable areas with the goal of removing them from the list. Thus, it can be observed that the police list has a significant impact on how different residential areas are perceived.

One way to examine how an area's reputation is affected by being on the police list is to examine the average prices of homes sold. The study finds a negative effect on prices, both in the short and longer term. In the first year after an area is added to the list, on average, prices fall by 3.7 percent compared to what was expected. After six years, the prices had fallen by 6.5 percent on average. The decline varies between areas, with some remaining unchanged and others experiencing large declines.

– We interpret the reduction in housing prices as an average reduction in demand for housing in these residential areas. The exact reason why the effect varies between areas is not obvious. One factor that seems to have had an impact is that local media reported on the incident to varying degrees, says Henrik Andersson.

Read the article

The article "Polisens lista över utsatta områden minskar efterfrågan på att bo i de utpekade områdena" is available in Ekonomisk Debatt in Swedish.

About the article

The study was conducted by researchers at the Department of Economics and the Institute for Housing and Urban Research at Uppsala University. Several of the researchers are affiliated with both the Uppsala Immigration Lab and Urban Lab.