IDEAS home Printed from https://ideas.repec.org/p/cep/sercdp/0204.html
   My bibliography  Save this paper

The Housing Market Impacts of Constraining Second Home Investments

Author

Listed:
  • Christian A. L. Hilber
  • Olivier Schöni

Abstract

We investigate how political backlash against wealthy second home investors in high-amenity places - tourist areas or superstar cities - affects local residents. We develop a general equilibrium model and exploit a quasi-natural experiment -the 'Swiss Second Home Initiative' (SHI) -to test the key predictions of the model. Consistent with theory, we find that the SHI, which banned the construction of new second homes in desirable tourist locations, lowered transaction prices of primary homes in affected areas by around 12 percent but did not adversely affect prices of second homes. Our findings suggest that the negative effect on local economies dominated positive amenity-preservation effects. We conclude that constraining second home investments may reinforce rather than reduce wealth inequality.

Suggested Citation

  • Christian A. L. Hilber & Olivier Schöni, 2016. "The Housing Market Impacts of Constraining Second Home Investments," SERC Discussion Papers 0204, Spatial Economics Research Centre, LSE.
  • Handle: RePEc:cep:sercdp:0204
    as

    Download full text from publisher

    File URL: http://www.spatialeconomics.ac.uk/textonly/SERC/publications/download/sercdp0204.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Yashar Blouri & Maximilian von Ehrlich, 2017. "On the Optimal Design of Place-Based Policies: A Structural Evaluation of EU Regional Transfers," CESifo Working Paper Series 6742, CESifo.
    2. Somerville, Tsur & Wang, Long & Yang, Yang, 2020. "Using purchase restrictions to cool housing markets: A within-market analysis," Journal of Urban Economics, Elsevier, vol. 115(C).
    3. Daniel Steffen, 2017. "The Effect of a Second Home Construction Ban on Real Estate Prices," Diskussionsschriften credresearchpaper18, Universitaet Bern, Departement Volkswirtschaft - CRED.
    4. Yashar Blouri & Maximilian von Ehrlich, 2017. "On the Optimal Design of Place-Based Policies: A Structural Evaluation of EU Regional Transfers," CESifo Working Paper Series 6742, CESifo.

    More about this item

    Keywords

    second homes; wealth inequality; land use regulation; house prices; homeownership; real estate investments;
    All these keywords.

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets
    • R52 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Land Use and Other Regulations

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cep:sercdp:0204. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (). General contact details of provider: http://www.spatialeconomics.ac.uk/SERC/publications/default.asp .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.