Geography of the wealth, time preference and commercialization of the Viager product
Coulomb, Jean-Baptiste (2019), Geography of the wealth, time preference and commercialization of the Viager product, 59th ERSA Congress - Cities, regions and digital transformations: opportunities, risks and challenges, 2019-08, Lyon, France
TypeCommunication / Conférence
Conference title59th ERSA Congress - Cities, regions and digital transformations: opportunities, risks and challenges
MetadataShow full item record
Dauphine Recherches en Management [DRM]
Abstract (EN)A Viager real estate transaction, which can also be called a « lifetime annuity real estate » transaction, consists in selling a property in return for a down payment and a lifetime annuity that the buyer has to pay until the seller dies. This paper presents a quantitative analysis of the geography of the wealth, of the time preference and the commercialization of the viager product. The analysis is based on 2 678 transactions from 2010 to 2018. It explores in particular the preference between a lifetime annuity and a down payment.In our paper, we analyze French data by departments. Firstly, the potential viager wealth, estimated at 1 059 billion euros in France, appears less concentrated across the departments compared to the total residential real estate wealth. This potential can vary between 8,6% and 33,5% of the total. The lower cases correspond to very urban and metropolitan departments. The higher cases correspond to a mix between departments confronted to a desertification process and littoral departments very attractive for retired people.Secondly, the analysis of the time preference (down-payment versus annuities) indicates that the distance between buyers and sellers is not significant despite the existence of a local bias (buyers and sellers often live in the same municipality). Results also show that when sellers are older or when the ownership rate is higher in the municipality, annuity is preferred to down-payment. On the contrary, richer sellers prefer down payment.Thirdly, the study of the time-on-market shows that the higher the time of commercialization, the lower the final economic value is for the seller. The joint life expectancy also has an impact on the commercialization process: younger sellers have a lower economic value as their right of use and habitation are higher.
Subjects / KeywordsHousing stock; Lifetime annuity; Ageing
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