The effects of government interventions on housing market: A meta-study of empirical literature

Abstract

Housing markets are affected by a wide variety of factors. Among them, governmental regulations play an important role. Besides desired effects, all these policies exert a number of side effects, even offsetting the desired effects. In addition, different policies can cancel out each other. Therefore, it is important to be aware of the effects of individual policies and the composite effects resulting from the simultaneous application of different policies. This study summarizes findings of an extensive literature on the effects of a wide range of governmental policies that affect housing markets. It covers such policies as rent control, protection from eviction, housing rationing, housing allowances, provision of social housing, tax treatment of homeownership, property taxation, building codes, land-use regulations, and macroprudential policies. Moreover, it examines the effects of monetary, fiscal, and labor policies. The aim is to identify the most prominent effects and their direction. This should provide guidance to policy makers because it identifies potential advantages and disadvantages of various policy tools and their combinations.