Effectiveness of German urban preservation area statutes: A staggered difference-in-difference approach for the Berlin residential real estate market

In recent years, Berlin has been the scene of various government interventions in the local real estate market, especially in the residential sector. Alongside measures like the "Mietpreisbremse" (rent brake) and the "Mietendeckel" (rent cap), the establishment of so-called "Erhaltungsgebiete" (urban preservation areas) is one of the most dominant state interventions in the Berlin real estate market. In Germany, urban preservation area statutes are regulations that can be enacted by the municipalities based on the special urban development law according to the German Building Code (BauGB). Since 1995, Berlin has established 74 urban preservation areas to preserve the composition of the local residential population and to avoid segregation and gentrification. This study provides insights into how the designation of urban preservation areas affects local housing prices and whether the objectives pursued by the regulator are achieved. Therefore, a unique data set, including 370,000 apartment transactions between 1984 and 2020, is analyzed. In combination with spatial data, a staggered difference-in-difference approach is used to investigate the real estate price development before and after the implementation of the respective regulation in comparison to non-regulated properties.