Abstract

Despite rather skeptical attitude of economists toward state intervention in housing markets, policy makers and the general public typically support it. As a result, since World War I, in many countries the rent and eviction controls, as well as housing rationing, are an important element of governmental economic and social policies. Nevertheless, the macroeconomic effects of such regulations are largely unknown. In this paper, we evaluate the effects of governmental rental market regulations on real house prices, price-to-rent, and price-to-income ratios, real rents, as well as new housing construction in Germany from 1950 to 2015. The regulations are measured using binary indices based on a thorough analysis of the corresponding legal acts issued between 1910 and 2017.