Mark Van Duijn (p)

Yuri Yegorov

After the global financial crisis, many housing markets became dysfunctional. In 2011, the Dutch government decided to decrease the property transfer tax from six to two percent to stimulate the owner-occupied housing market. It is well documented that taxes levied on the sale of purchase of a house decrease the number of sales and housing prices. However, it is little studied whether these effects are general for the whole housing market. This study investigates the heterogeneous effects of the declining property transfer taxes on the number of sales and house prices. Our data show that the tax decline caused higher number of sales and housing prices for lower quality houses compared to higher quality houses. These results are strengthened if we compare regions with population growth and regions with population decline. This suggests that the property tax decline has immediate policy implications. The associated welfare gains are mostly transferred to lower quality housing markets and shrinking areas.

David Koch, Miroslav Despotovic (p), Matthias Zeppelzauer, Gunther Maier, Mario Döller

Mark Van Duijn

See extended abstract

Yuri Yegorov (p)

Miroslav Despotovic

This paper derives aggregate and average land rent for a city using two-dimensional model in continuous space and discusses their macroeconomic implications. This result has important theoretical and policy implications. Land rent of a city is a collective phenomenon when value is created not by production, but by relative location of people in space. Since some cities have also scale economies, their growth to optimal level is justified. However, cities may stay out of equilibrium for a long time due to slowness of adjustment processes and incomplete information about real value of living there. Developers are driven by profits from aggregate city land rent and may aggressively boost construction beyond the optimal city size. To whom city land rent should belong is a new but important social question that requires further study.