Subsidies to Homeownership and Central City Rent

Alexander Daminger

No 210, Working Papers from Bavarian Graduate Program in Economics (BGPE)

Abstract: This paper analyzes the effects of German homeownership subsidies on the intra-city rent structure. Using a large-scale micro data set on German rent offerings, I first construct novel city rent indexes that include various rings around cities’ CBDs. Using triple differences (TD) frameworks, I then estimate the introduction of the homeownership subsidies’ effects on rent for the cities that received varying subsidy rates. The empirical results indicate that subsidies to homeownership lower central apartment rent premiums in those cities, where they give the “biggest bang for the buck”. Consequently, I find that homeownership subsidies contribute to an increase in housing affordability through the price changes in the rental market: an increase in the subsidies leads potential homeowners to move away from the CBD, resulting in a decrease in the rental demand and lowering the rent.

Keywords: homeownership; housing subsidies; homeownership subsidy; triple differences (search for similar items in EconPapers)
JEL-codes: H22 H71 R31 R38 (search for similar items in EconPapers)
Pages: 47 pages
Date: 2021-07
New Economics Papers: this item is included in nep-eur and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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https://bgpe.cms.rrze.uni-erlangen.de/files/2023/0 ... entral-City-Rent.pdf First version, 2021 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:bav:wpaper:210_daminger

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