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Subsidies to Homeownership and Central City Rent

Author

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  • Alexander Daminger

Abstract

This paper analyzes the effects of German homeownership subsidies on the intra-city rent structure. Using a large-scale microdata set on German rent offerings, I first construct novel city rent indexes that include various rings around cities’ CBDs. Using triple differences (DDD) frameworks, I then estimate the introduction of the homeownership subsidies’ effects on rent for cities that received varying subsidy rates. The empirical results indicate that subsidies to homeownership lower central apartment rent premiums in those cities, where they give the “biggest bang for the buck”. Consequently, I find that homeownership subsidies contribute to an increase in housing affordability through the price changes in the rental market: an increase in the subsidies leads potential homeowners to move away from the CBD, resulting in a decrease in the rental demand and lowering the rent.

Suggested Citation

  • Alexander Daminger, 2025. "Subsidies to Homeownership and Central City Rent," ERES eres2025_96, European Real Estate Society (ERES).
    • Handle: RePEc:arz:wpaper:eres2025_96
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    1. is not listed on IDEAS
    2. Alexander Daminger, 2023. "Homeowner Subsidies and Suburban Living: Empirical Evidence from a Subsidy Repeal," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 79(2), pages 111-145.
    3. Posada, Hector M. & García-Suaza, Andrés & Londoño, David, 2022. "The external effects of public housing developments on informal housing: The case of Medellín, Colombia," Working papers 98, Red Investigadores de Economía.
    4. H. M. Posada & A. F. Garc�a & D Londo�o, 2022. "The external effects of public housing developments on informal housing: The case of Medellín, Colombia," Documentos de Trabajo 20416, Universidad del Rosario.
    5. Alexander Daminger & Kristof Dascher, 2023. "Homeowner Subsidy Repeal and Housing Recentralization," Land Economics, University of Wisconsin Press, vol. 99(2), pages 283-301.

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    JEL classification:

    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

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