Impact of globalisation on national accounts

1. Agenda item 8 Impact of globalisation on national accounts Session VIII: Second homes

3. Second homes: vacation home ownership • Good paper – well written • Main messages • Increasing number of second homes abroad • Increasing number of overnights in 2nd homes • It’s very difficult to measure the associated national accounts and BoP entries • But - we have to start sometime !

4. Second homes: vacation home ownership • Visiting the vacation home is tourism • Tourism is the activity of visitors – people outside their usual environment for less than a year for purposes other than work • Usual environment will include their main residence – where they stay for most of the year • Not all second homes will be included in vacation homes – those used to enable work will be excluded (hopefully not many of these).

5. Second homes: vacation home ownership • There is a careful distinction between tourism as defined in the IRTS, and the activities represented in the TSA – the main one being the imputation of owner-occupied rent consistent with the estimation of rent for owner-occupied dwellings in the national accounts.

6. Second homes: vacation home ownership • The TSA says (without justification) • This service (of owner-occupied rent for vacation homes) is part of tourism supply and consumption irrespective of whether the dwelling has actually been visited in the period • I think this needs amplification and explanation

7. Second homes: vacation home ownership • Presumably the analogy is like a company owning a company car. We don’t care how exactly the car is sued in its useful life – e.g. if it sits in the garage all winter, we don’t score a reduced capital service in that season • But dwellings are arguably different – the rent is for “owner-occupied” homes. If they are not occupied for significant part of their life, then the service is significantly different from that of rented accommodation which will be used for the majority of its life.

8. Second homes: vacation home ownership • Europe case study • Tantalising reference to the Eurostat database, which should be extended for a longer time period, and more analysis carried out: • is this database published? • has a report been written? • What are future plans?

9. Second homes: vacation homes in France • Source data from local administrative sources is used to generate a comprehensive picture of vacation homes in France, including identity of owners by country • Housing census plus administrative records from the local tax system, levied on housing, land and use of these assets. • Can other countries do the same?

10. Second homes: vacation homes in Spain • Data based on a survey (Frontur) to inbound visitors • Table 3 shows the rise in the stock of all dwellings, and secondary dwellings – graphs help here (and for the UK later) – see next slide • Supply source sounds hopeful – e.g. covered by Housing census from 2006

11. Second homes: UK vacation home ownership • The Housing census of England asks about ownership of vacation homes abroad • Table 4 shows the increase in the UK ownership of second homes abroad

12. Second homes: measurement issues • We need housing censuses that cover all dwellings, main and secondary • We need Census questions asked on ownership of second homes abroad • We need more data collected and assessed from an international standpoint, using SNA 2008 conventions. • We should use the same techniques and conventions to estimate rent of second homes, as for main dwellings

13. Second homes: measurement issues • A lot of unknowns still in the paper • It might not be possible for housing censuses to establish identity of owners • Questions may be included in the forthcoming population census • In fact, the most common qualifier in the potential actions to collect more data is “might”

14. Second homes: measurement issues • Use of administrative data • French example – FILOCOM – very encouraging – but not compatible with census data • Imputed rent – in Europe, countries should follow Eurostat approved methods for main dwellings

15. Second homes: What next? • List of daunting barriers • In Europe, even with the GNI committee looking for comparable methods, very little progress • “a grey area”

16. Second homes: Proposal • Establish an inventory of who does what in each country (is it already in GNI inventory?) • Agree on a common standards and practice • This will need a combination of supply and demand statistics – supply will give the stock of second homes, and their characteristics • Demand will give time spent in second homes, and money spent whilst visitors are there

17. Second homes: Proposal • Begin an international project to examine and reconcile asymmetries in the recoding of vacation home activities

18. Second homes abroad: Norway • What a surprise! • Given all the barriers so well laid out in the WTO paper, it is reassuring to read of the Norway process, which presumably is similar to the process carried out in every other European MS to meet the demands of the GNI committee and the associated regulation 1722/2005

19. Second homes abroad: Norway • The compilation methods are very clearly laid out, and the diagrams and explanations are excellent • The issue of unoccupied owner-occupied dwellings is addressed by the cunning device of estimating the annual rent for similar properties. • But as the paper says, this must raise questions about the relative time periods of occupation between rented accommodation and vacation homes • The ESA regulation does not seem internally consistent on this point • There seems to be a different approach in TSA to Europe.

20. Second homes abroad: Norway • The extent of the assumptions is striking • Estimating owner-occupied dwellings imputed rent is difficult enough, and the step to vacation homes seems even more “courageous” • All of this is wholly consistent with the WTO paper – we need international leadership in this area, to ensure all countries are following the same methods, and ensuring that data sources exist to enable the methods to be applied.

21. Second homes abroad: Norway • Comments from the view of a contribution to the report. • A chapter could be a combination of the two papers, using the WTO as context and background, and the Norway paper as an example of how to tackle the measurement issues.

22. Second homes abroad: Norway • The Norway example cannot be presented as best practice. It is simply an example of what MS have to do to produce an estimate for the European regulation • It does raise the issue of whether we should measure imputed rent for holiday homes only when they are occupied, or for the complete period.

23. Second homes abroad: Norway • Here TSA seem to contradict the main thrust of the European practice (use annual rent of similar renting accommodation to get an estimate of annual imputed rent • And the SNA treatment seems inconsistent with the treatment for resident owner-occupied dwellings, where being furnished is a justification to estimate imputed rent for the whole period.

24. Second homes abroad: Norway • Conclusion – this one is for the research agenda • to get a clear non-contradictory view on whether rent is imputed for occupation, or potential occupation • - to get more practical guidelines on what is possible now with existing data sources, and what questions should be asked to improve the quality and coverage of the data (and cut down the assumptions!)