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Economic effects of upfront subsidies to ownership: The case of the Prêt à Taux Zéro in France

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Listed:
  • Gobillon, Laurent
  • le Blanc, David

Abstract

This article analyses some effects of the French upfront subsidy to homeownership called Prêt à Taux Zéro (PTZ) introduced in 1996. The PTZ can be viewed as a downpayment subsidy to low and middle-income first-time buyers. The effects of the subsidy are modelled by simulating the introduction of the PTZ in an econometric model of mobility and tenure choice estimated on micro-data. Our results show that the PTZ significantly increases access to ownership by allowing some households to leave the rental sector sooner. However, the PTZ generates a large windfall effect. We estimate that 85% of the beneficiaries in a 4-year period would still have moved to own in the absence of the subsidy. As a consequence, the PTZ has a rather low multiplier effect, which we estimate at around 1.3. Our simulations also show that the PTZ may not help to improve the overall quality of new construction in France.

Suggested Citation

  • Gobillon, Laurent & le Blanc, David, 2008. "Economic effects of upfront subsidies to ownership: The case of the Prêt à Taux Zéro in France," Journal of Housing Economics, Elsevier, vol. 17(1), pages 1-33, March.
    • Handle: RePEc:eee:jhouse:v:17:y:2008:i:1:p:1-33
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    3. Laurent Gobillon & François-Charles Wolff, 2009. "Housing and location choices of retiring households: Evidence from France," PSE Working Papers hal-00424096, HAL.
    4. Laurent Gobillon & Matthieu Solignac, 2020. "Homeownership of immigrants in France: selection effects related to international migration flows [A nation of immigrants: assimilation and economic outcomes in the age of mass migration]," Journal of Economic Geography, Oxford University Press, vol. 20(2), pages 355-396.
    5. Nathalie Picard & André de Palma, 2025. "Residential Location Models: Analyzing Segregation, Borrowing Constraints, and Policy Implications," Working Papers of BETA 2025-33, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    6. Dietsch, Michel & Petey, Joël, 2015. "The credit-risk implications of home ownership promotion: The effects of public subsidies and adjustable-rate loans," Journal of Housing Economics, Elsevier, vol. 28(C), pages 103-120.
    7. Suntum, Ulrich van, 2009. "Housing, taxation and retirement provision," Journal of Housing Economics, Elsevier, vol. 18(3), pages 249-255, September.
    8. Kunovac, Davor & Zilic, Ivan, 2022. "The effect of housing loan subsidies on affordability: Evidence from Croatia," Journal of Housing Economics, Elsevier, vol. 55(C).
    9. Laurent Gobillon & Francois-Charles Wolff, 2011. "Housing and Location Choices of Retiring Households: Evidence from France," Urban Studies, Urban Studies Journal Limited, vol. 48(2), pages 331-347, February.
    10. Sophie Dantan & Nathalie Picard, 2019. "Borrowing constraints and location choice - Evidence from the Paris Region," Thema Working Papers 2019-05, THEMA (Théorie Economique, Modélisation et Applications), CY Cergy-Paris University, ESSEC and CNRS.
    11. Sylvain Chareyron & Tidiane Ly & Yohann Trouvé-Sargison, 2021. "Ownership incentives and housing affordability: Evidence from France," Erudite Working Paper 2021-03, Erudite.
    12. Sophie Dantan & Nathalie Picard, 2016. "Effect Of Borrowing Constraints On Location Choice: Evidence From The Paris Region," Working Papers hal-01294215, HAL.
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