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The Housing Market Impacts of Constraining Second Home Investments

Christian Hilber ()

Diskussionsschriften from Universitaet Bern, Departement Volkswirtschaft - CRED

Abstract: We investigate how political backlash against wealthy second home investors in high-amenity places – tourist areas and superstar cities – affects local residents. We exploit a quasi-natural experiment: the ‘Swiss Second Home Initiative’ (SHI), which banned the construction of new second homes in desirable tourist locations. Consistent with our model, we find that the SHI lowered transaction prices of primary homes in affected areas by around 12% but did not adversely affect prices of second homes. Our findings suggest that the negative effect on local economies dominated positive amenity-preservation effects. Constraining second home investments may reinforce rather than reduce wealth inequality.

Keywords: Second homes; wealth inequality; land use regulation; house prices; homeownership; real estate investments (search for similar items in EconPapers)
JEL-codes: D63 G12 R11 R21 R31 R52 (search for similar items in EconPapers)
Date: 2016-08
New Economics Papers: this item is included in nep-geo, nep-knm and nep-ure
References: View complete reference list from CitEc
Citations: View citations in EconPapers (3) Track citations by RSS feed

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Working Paper: The Housing Market Impacts of Constraining Second Home Investments (2016) Downloads
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