Portfolio Allocation and Housing Markets

Rémi Lei () and Ségal Le Guern Herry ()
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Rémi Lei: BSE - Bordeaux sciences économiques - UB - Université de Bordeaux - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - ENPC - École nationale des ponts et chaussées - IP Paris - Institut Polytechnique de Paris
Ségal Le Guern Herry: AMSE - Aix-Marseille Sciences Economiques - EHESS - École des hautes études en sciences sociales - AMU - Aix Marseille Université - ECM - École Centrale de Marseille - CNRS - Centre National de la Recherche Scientifique

Working Papers from HAL

Abstract: We study whether higher taxes on housing relative to financial assets for wealthy households can improve housing affordability for the rest of the population. We exploit the 2017 French wealth tax reform, which transformed the comprehensive wealth tax into a real-estate tax and sharply deteriorated the after-tax return to housing relative to financial assets at the top. Using cadastral data, we construct a measure of local exposure to the reform and show that wealthy owners increased housing sales significantly more in highly exposed areas, while non-wealthy owners did not respond. We then examine local redistribution effects and find that, in the most exposed areas, post-reform transactions increasingly involve buyers who are less wealthy than the sellers, alongside a rise in first-time buyers. Finally, portfolio responses occur only for properties benefiting from capital gains tax rebates, suggesting an interaction with capital gains taxation. Our findings indicate that fiscal policies affecting portfolio incentives at the top can influence local housing market dynamics.

Date: 2026-10-09
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Persistent link: https://EconPapers.repec.org/RePEc:hal:wpaper:hal-05788117

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