Arbeitspapier

The effect of real estate purchase subsidies on property prices

This paper assesses to which degree housing purchase subsidies are capitalized into property prices. Using a large-scale micro data set on German house prices, I exploit the introduction of a new subsidy scheme in the state of Bavaria. My difference-indifference estimations at the Bavarian interstate border indicate that the prices of single-family homes increased by about 3.4% more in Bavarian border regions. This is consistent with a full capitalization of the subsidy. No effect is found for apartments, whose purchasers seldom qualify for the subsidy. A heterogeneity analysis confirms that the price effect is larger in segments of the real estate market with a higher exposure to the subsidy scheme. I also provide suggestive evidence that the subsidy scheme slightly stimulated construction activity. Overall, my results indicate that instead of making house purchases more affordable for families, the subsidy scheme led to a rise in house prices and mainly benefited sellers of properties.

Sprache
Englisch

Erschienen in
Series: ifo Working Paper ; No. 333

Klassifikation
Wirtschaft
Taxation and Subsidies: Incidence
Personal Income and Other Nonbusiness Taxes and Subsidies; includes inheritance and gift taxes
State and Local Taxation, Subsidies, and Revenue
Housing Supply and Markets
Production Analysis and Firm Location: Government Policy
Thema
real estate market
housing subsidies
property prices

Ereignis
Geistige Schöpfung
(wer)
Krolage, Carla
Ereignis
Veröffentlichung
(wer)
ifo Institute - Leibniz Institute for Economic Research at the University of Munich
(wo)
Munich
(wann)
2020

Handle
Letzte Aktualisierung
10.03.2025, 11:44 MEZ

Datenpartner

Dieses Objekt wird bereitgestellt von:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.

Objekttyp

  • Arbeitspapier

Beteiligte

  • Krolage, Carla
  • ifo Institute - Leibniz Institute for Economic Research at the University of Munich

Entstanden

  • 2020

Ähnliche Objekte (12)