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Who Pays for Higher Energy Prices? Distributional Effects in the Housing Market

Author

Listed:
  • Francisco Amaral

    (University of Zurich - Department Finance; Swiss Finance Institute)

  • Steffen Zetzmann

    (University of Mannheim)

Abstract

We study how energy price shocks transmit through segmented housing markets. Using German rental listings from 2015 to 2024, we show that higher energy prices are capitalized into rents only in high-rent segments, where elastic demand pressures landlords to reduce rents for inefficient units. In low-rent segments, characterized by less elastic demand and tight markets, rents do not adjust, leaving low-income households to bear the full increase in energy bills. As a result, total housing costs for low-income households rise three times more than for high-income households when energy prices increase, amplifying existing inequality.

Suggested Citation

  • Francisco Amaral & Steffen Zetzmann, 2025. "Who Pays for Higher Energy Prices? Distributional Effects in the Housing Market," Swiss Finance Institute Research Paper Series 25-101, Swiss Finance Institute.
    • Handle: RePEc:chf:rpseri:rp25101
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    JEL classification:

    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q54 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Climate; Natural Disasters and their Management; Global Warming
    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution

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