Forward to the Past: Short-Term Effects of the Rent Freeze in Berlin

Hahn, Anja M. and Kholodilin, Konstantin A. and Waltl, Sofie R. (2020) Forward to the Past: Short-Term Effects of the Rent Freeze in Berlin. Department of Economics Working Paper Series, 308. WU Vienna University of Economics and Business, Vienna.

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Abstract

In 2020, Berlin enacted a rigorous rent-control policy: the “Mietendeckel” (rent freeze), aiming to stop rapidly growing rental prices. We evaluate this newly enacted but old-fashionably designed policy by analyzing its immediate supply-side effects. Using a rich pool of rent advertisements reporting asking rents and comprehensive dwelling characteristics, we perform hedonic-style Difference-in-Difference analyses comparing trajectories of dwellings inside and outside the policy’s scope. We find no immediate effect upon announcement of the policy. Yet advertised rents drop significantly upon the policy’s enactment. Additionally, we document a substitution effect affecting the rental markets of Berlin’s (unregulated) satellite city Potsdam and adjacent smaller municipalities. On top, the supplemental quantity analyses reveal a stark reduction of the number of advertised rental units hampering a successful housing search for newcomers, (young) first-time renters and tenants aiming for a different housing opportunity.

Item Type: Paper
Keywords: First-Generation Rent Control, Rent Freeze, Urban Policy, Rent Price, Supply Disruptions, Berlin
Classification Codes: JEL C14, C43, O18
Divisions: Departments > Volkswirtschaft
Depositing User: Claudia Tering-Raunig
Date Deposited: 04 Jan 2021 09:04
Last Modified: 04 Jan 2021 09:04
URI: https://epub.wu.ac.at/id/eprint/7911

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