Who pays for higher energy costs? Distributional effects in the housing market

Francisco Osswald do Amaral and Steffen Zetzmann

No 2297, Kiel Working Papers from Kiel Institute for the World Economy (IfW Kiel)

Abstract: We examine how rising energy costs affect rental housing markets and inequality. Using listing data for the 30 largest German cities from 2015-2024, we find that higher energy prices are passed through to net rents in high-rent segments, where inefficient properties see significant rent reductions, but not in lower-priced segments. This asymmetry reflects tighter markets and lower demand elasticity in the affordable segment. Consequently, low-income households face much larger increases in total housing costs. Our results show how segmented housing markets can amplify inequality when energy prices rise, highlighting important distributional implications for climate policy.

Keywords: Housing Markets; Energy Prices; Climate Change; Inequality (search for similar items in EconPapers)
JEL-codes: D31 Q41 Q54 R31 (search for similar items in EconPapers)
Date: 2025
New Economics Papers: this item is included in nep-ene, nep-env, nep-eur and nep-reg
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifwkwp:324656

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