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One Year of the Rent Cap: How Has the Berlin Real Estate Market Developed?

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  • Mathias Dolls
  • Clemens Fuest
  • Florian Neumeier
  • Daniel Stöhlker

Abstract

One year after the Berlin rent cap came into force, it has led to a bifurcation of the Berlin real estate market. This is shown by an analysis of data from the real estate portal immowelt.de. Berlin rent and purchase prices in the regulated segment have developed more weakly since the rent cap came into force than in a control group, which includes all other major German cities with more than 500,000 inhabitants. Purchase price growth rates in Berlin, for example, have been 5–9 percentage points below the control group since the third quarter of 2020. By contrast, rental and purchase prices in the unregulated segment of Berlin have recently risen more strongly than in the control group. The decline in the number of rental advertisements in the regulated segment is an indication that the rent cap has reduced the supply of available rental housing in Berlin. The decline in house price growth documents the losses caused by the rent cap for apartment owners.

Suggested Citation

  • Mathias Dolls & Clemens Fuest & Florian Neumeier & Daniel Stöhlker, 2021. "One Year of the Rent Cap: How Has the Berlin Real Estate Market Developed?," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 74(03), pages 26-29, February.
    • Handle: RePEc:ces:ifosdt:v:74:y:2021:i:03:p:26-29
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    References listed on IDEAS

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    1. Mathias Dolls & Clemens Fuest & Carla Krolage & Florian Neumeier & Daniel Stöhlker, 2020. "Economic Effects of the “Berliner Mietendeckel”," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 73(03), pages 33-38, March.
    2. Hainmueller, Jens, 2012. "Entropy Balancing for Causal Effects: A Multivariate Reweighting Method to Produce Balanced Samples in Observational Studies," Political Analysis, Cambridge University Press, vol. 20(1), pages 25-46, January.
    3. Rebecca Diamond & Tim McQuade & Franklin Qian, 2019. "The Effects of Rent Control Expansion on Tenants, Landlords, and Inequality: Evidence from San Francisco," American Economic Review, American Economic Association, vol. 109(9), pages 3365-3394, September.
    4. David H. Autor & Christopher J. Palmer & Parag A. Pathak, 2014. "Housing Market Spillovers: Evidence from the End of Rent Control in Cambridge, Massachusetts," Journal of Political Economy, University of Chicago Press, vol. 122(3), pages 661-717.
    5. Jeremy Bulow & Paul Klemperer, 2012. "Regulated Prices, Rent Seeking, and Consumer Surplus," Journal of Political Economy, University of Chicago Press, vol. 120(1), pages 160-186.
    6. Sims David P, 2011. "Rent Control Rationing and Community Composition: Evidence from Massachusetts," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 11(1), pages 1-30, May.
    7. Edward L. Glaeser & Erzo F. P. Luttmer, 2003. "The Misallocation of Housing Under Rent Control," American Economic Review, American Economic Association, vol. 93(4), pages 1027-1046, September.
    8. Sims, David P., 2007. "Out of control: What can we learn from the end of Massachusetts rent control?," Journal of Urban Economics, Elsevier, vol. 61(1), pages 129-151, January.
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    Cited by:

    1. Dolls, Mathias & Schüle, Paul & Windsteiger, Lisa, 2022. "Affecting Public Support for Economic Policies: Evidence from a Survey Experiment about Rent Control in Germany," VfS Annual Conference 2022 (Basel): Big Data in Economics 264060, Verein für Socialpolitik / German Economic Association.
    2. Blesse, Sebastian & Heinemann, Friedrich & Krieger, Tommy, 2021. "Informationsdefizite als Hindernis rationaler Wirtschaftspolitik: Ausmass, Ursachen und Gegenstrategien. Eine Studie mit Unterstützung der Brigitte Strube Stiftung," ZEW Expertises, ZEW - Leibniz Centre for European Economic Research, number 241989.

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