Real estate transaction taxes and credit supply

M. Koetter, P. Marek and A. Mavropoulos

Journal of Financial Stability, 2025, vol. 80, issue C

Abstract: We exploit staggered real estate transaction tax (RETT) hikes across German states to identify the effect on the growth rates of regional house prices and outstanding mortgage loans by all local German banks. The results show that a RETT hike by one percentage point reduces regional house prices by 3%–4%. Furthermore, IV-regressions yield that a 1 percentage point drop in regional house prices induced by a RETT increase leads to a 0.3% decline in regional mortgage lending, particularly among low-capitalized banks in rural regions.

Keywords: Fiscal policy; Housing; Mortgage lending; Financial stability (search for similar items in EconPapers)
JEL-codes: H30 R00 R31 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finsta:v:80:y:2025:i:c:s1572308925000658

DOI: 10.1016/j.jfs.2025.101436

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