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Investment incentives of rent controls and gentrification – Evidence from German micro data

Author

Listed:
  • Vera Baye

    (University of Osnabrueck)

  • Valeriya Dinger

    (University of Osnabrueck and Leeds University Business School)

Abstract

We investigate how housing returns are influenced by the introduction of a rent brake as a form of rental control in Germany in 2015. We derive the housing returns by matching micro-level quotes on similar objects offered for rent and for sale. We exploit the temporal,regional and object-specific variation in the framework of a multi period difference-in-differences analysis to identify the effect of the rent brake. Our results show that the main goal of the political intervention to secure affordable living space in tense housing markets cannot be attained due to construction incentives in newbuilds and fostered gentrification.

Suggested Citation

  • Vera Baye & Valeriya Dinger, 2021. "Investment incentives of rent controls and gentrification – Evidence from German micro data," NBP Working Papers 342, Narodowy Bank Polski.
    • Handle: RePEc:nbp:nbpmis:342
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    Cited by:

    1. Kholodilin, Konstantin A., 2024. "Rent control effects through the lens of empirical research: An almost complete review of the literature," Journal of Housing Economics, Elsevier, vol. 63(C).
    2. Koo, Kang Mo & Kim, Jinyoo, 2025. "Putting a ceiling on housing costs: The aftermath of nationwide rent control in the case of jeonse system in Korea," Journal of Housing Economics, Elsevier, vol. 67(C).
    3. Konstantin A. Kholodilin, 2025. "The Impact of Governmental Regulations on Housing Market: Findings of a Meta-Study of Empirical Literature," Discussion Papers of DIW Berlin 2113, DIW Berlin, German Institute for Economic Research.

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    Keywords

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    JEL classification:

    • R38 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Government Policy
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets
    • E65 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Studies of Particular Policy Episodes
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population
    • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General

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