Seminario 18/6: -Konstantin Kholodilin (DIW Berlin)- Rental housing policies and the tenure choice: A multi-country dynamic panel data analysis

Información

The homeownership plays an important role in the wealth accumulation, given that the real estate represents over the half of the private households’ wealth. For more than a century, the governments in the market economies have striven to maximize the proportion of households who occupy their own dwellings. The homeowners are thought to be better citizens and better savers than the tenants. In effect, in most countries both total and urban homeownership rates increased, especially after World War II. At the same time, due to the wars and revolutions that plagued most of the 20th century, restrictive housing policies (rent control, protection of tenants from eviction, and housing rationing) have been actively employed in virtually all countries of the world. Their declared purpose has been an improved affordability of the housing, countering inflation, and the defense of the tenants, being an arguably more fragile and undoubtedly a more numerous group of population in the cities, at least when such policies emerged. The purpose of this study is to investigate the impact of the restrictive rental housing measures upon the homeownership rates worldwide. By restricting the freedom of rent setting and disposing of their property by the landlords as well as by providing a higher tenure security for tenants, such policies dramatically changed the incentive system of all the market participants. These policies are approximated by a set of indices based on a thorough analysis of the relevant legislation issued between 1910 and 2017 in 36 countries. This is a unique data set in terms of its spatiotemporal coverage and the scope of regulations being considered. Along with the standard explanatory variables (such as urbanization rate and age structure of population), the regulation indices are used in dynamic panel data regressions, where the country-specific homeownership rates represent the dependent variable. The econometric analysis shows that housing regulations do affect the homeownership rates. In particular, rent control seems to exert a statistically significant positive impact on the choice of the owner occupied housing.