The impact of the rental housing and land-use regulations on the build-up of the speculative house price bubbles: An international evidence

At latest, since the world economic crisis of 2008–2009, it became clear that the spillover effects stemming from real estate markets can exert impact on the global financial and economic system. Speculative house price bubbles lead to a high instability of the overall economic situation. A burst of a bubble can cause a strong increase in the number of unemployed and bankruptcies and eventually lead to a deep and long-lasting general economic recession. Its effects can be especially devastating, if the speculative price bubble has been mainly financed through mortgage loans.

The state can contribute to the developments on the real estate market by its policies. Although the most part of the housing stock worldwide is provided by the private markets and not by the social state, the government regulations can significantly affect the private rental and purchase markets. Particularly important can be the impact of the rental housing regulations (rent control and protection of tenants from eviction), for they influence both the tenure choice and the investments into the housing market. Moreover, the land-use regulations can have a substantial effect on the real estate markets. The restrictions in respect to the housing density, size of land plots, height of buildings, energy consumption standards, minimum number of parking lots, etc. can lead to an inflexible supply and high real estate prices.

The aim of this project is to investigate the impact of the rental market and land-use regulations upon the build-up of speculative price bubbles, which in the past led to financial instability and deep recessions. The main hypothesis to be tested is that the under- and overregulated residential rental markets had contributed to an overproportionate credit-financed formation of the homeownership, which, in turn, paved the way for the speculative overheating of the housing markets. 

Participating Institutes

German Institute for Economic Research (DIW)

Leibniz Institute of Ecological Urban and Regional Development (IÖR)


Kholodilin, K.A., and S. Kohl. 2019. Die Regulierung des Wohnungsmarkts
hat weltweit zum Siegeszug des
Eigenheims beigetragen. DIW Wochenbericht 38.

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Kholodilin, K. A., and C. Michelsen. 2019. Das Risiko einer Immobilienpreisblase
ist in Deutschland sowie in
den meisten OECD-Ländern hoch. DIW Wochenbericht 32.

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Kholodilin, K.A., S. Kohl und T. Niemeyer. 2019. Steuerliche Instrumente der
Wohneigentumsförderung. DIW Roundup 132.

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Kholodilin, K. A., and C. Michelsen. 2018. Anzeichen für neue Immobilienpreisblase in einigen OECD-Ländern - Gefahr in Deutschland geringer. DIW Wochenbericht 30&31.

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Prof. Dr. sc. pol. Artem Korzhenevych (IÖR) 

Dr. habil. Konstantin A. Kholodilin (DIW)