Hilber, Christian A. L.; Schöni, Olivier (August 2016). The Housing Market Impacts of Constraining Second Home Investments (CRED Research Paper 11). Bern: CRED - Center for Regional Economic Development
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CRED Research Paper No. 11.pdf - Published Version Available under License Creative Commons: Attribution (CC-BY). Download (1MB) | Preview |
We investigate how political backlash against wealthy second home investors in high-amenity places – tourist areas and superstar cities – affects local residents. We exploit a quasi-natural experiment: the ‘Swiss Second Home Initiative’ (SHI), which banned the construction of new second homes in desirable tourist locations. Consistent with our model, we find that the SHI lowered transaction prices of primary homes in affected areas by around 12% but did not adversely affect prices of second homes. Our findings suggest that the negative effect on local economies dominated positive amenity-preservation effects. Constraining second home investments may reinforce rather than reduce wealth inequality.
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