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Forward to the Past: Short-Term Effects of the Rent Freeze in Berlin

Anja M. Hahn, Konstantin A. Kholodilin and Sofie Waltl ()

No 1928, Discussion Papers of DIW Berlin from DIW Berlin, German Institute for Economic Research

Abstract: In 2020, Berlin enacted a rigorous rent-control policy: the “Mietendeckel” (rent freeze), aiming to stop rapidly growing rental prices. We evaluate this newly enacted but old-fashionably designed policy by analyzing its immediate supply-side effects. Using a rich pool of rent advertisements reporting asking rents and comprehensive dwelling characteristics, we perform hedonic-style Difference-in-Difference analyses comparing trajectories of dwellings inside and outside the policy’s scope. We find no immediate effect upon announcement of the policy. Yet advertised rents drop significantly upon the policy’s enactment. Additionally, we document a substitution effect affecting the rental markets of Berlin’s (unregulated) satellite city Potsdam and adjacent smaller municipalities. On top, the supplemental quantity analyses reveal a stark reduction of the number of advertised rental units hampering a successful housing search for newcomers, (young) first-time renters and tenants aiming for a different housing opportunity.

Keywords: First-generation rent control; rent freeze; urban policy; rent price; supply disruptions; Berlin (search for similar items in EconPapers)
JEL-codes: C14 C43 O18 (search for similar items in EconPapers)
Pages: 42 p.
Date: 2021
New Economics Papers: this item is included in nep-eur and nep-ure
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Related works:
Working Paper: Forward to the Past: Short-Term Effects of the Rent Freeze in Berlin (2021) Downloads
Working Paper: Forward to the Past: Short-Term Effects of the Rent Freeze in Berlin (2020) Downloads
Working Paper: Forward to the Past: Short-Term Effects of the Rent Freeze in Berlin (2020) Downloads
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