Inflation and Rental Markets: Theory and Evidence from a Rent-Controlled System

Markus Knell ()
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Markus Knell: Oesterreichische Nationalbank, Economic Studies Division, http://www.oenb.at

Working Papers from Oesterreichische Nationalbank (Austrian Central Bank)

Abstract: How do rental markets shape inflation? In many countries, new leases follow the market, while ongoing rents rise only with inflation. Longterm tenants therefore pay less than newcomers – a “tenure discount.” This paper builds a simple model of this two-tier system and tests it with Austrian data (2005–2024). It shows how contract length and indexation rules make rent inflation persistent and how they drive inflation in both the short and long run.

Keywords: rental market; tenure discounts; inflation; indexation; rent control (search for similar items in EconPapers)
JEL-codes: E31 E32 R31 R38 (search for similar items in EconPapers)
Pages: 90
Date: 2026-10-02
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Persistent link: https://EconPapers.repec.org/RePEc:onb:oenbwp:282

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