Sectorstudy Property Finance
The risk of cartels forming in the property finance market has increased now that the number of players is small; and even has gone down in recent years. This study examines the operation of market forces in the property finance sector, based on Structure, Behaviour and Performance indicators. An analysis of Structure-indicators reveals three potential risks to competition and the likelihood of cartels forming: concentration has gone up in recent years – not just as a result of the credit crunch – and can be described as high; purchasers have limited opportunities to switch providers; and especially in the case of syndicated loans providers seem to be able to dictate (re)financing conditions.No explicit risks were found in the case of Behaviour and Performance indicators, partly because the lack of transparency in the sector stands in the way of in-depth (quantitative) analysis. The increase in prices since the credit crunch appears to be due mainly to cyclical and institutional trends. That there is more likely to be a scarcity premium than a monopoly premium cannot be shown explicitly, given the absence of quantitative data.
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