Housing inequality and how fiscal policy shapes it: Evidence from Belgian real estate

52 Pages Posted: 31 Oct 2023

See all articles by Gerard Domènech-Arumí

Gerard Domènech-Arumí

Université Libre de Bruxelles (ULB)

Paula E. Gobbi

Universite Libre de Bruxelles

Date Written: September 29, 2023

Abstract

We use data on the universe of real estate in Belgium to measure housing inequality and study how a policy reshaped it. We use all recent (2006-22) transactions and machine learning to predict the value of all dwellings in Belgium and estimate inequality. Our results indicate that nationwide inequality is relatively low (Gini of 0.25) but highly heterogeneous across and within municipalities. They suggest that housing (value) inequality is informative of income inequality. Our novel inequality estimates allow us to study the impact of a policy on housing inequality. Using a differences-in-differences framework, we find that a three percentage point reduction in house registration fees in Flanders increased prices by 3% and reduced inequality by 0.8% through compressing the dwelling value distribution from below. We argue that the primary winners of the policy were low-value homeowners, who saw their estate's valuation increase. Low-value renters might be adversely affected through future rent increases. The significant geographic heterogeneities documented throughout the paper highlight the importance of granularity when studying inequality and housing.

Keywords: Inequality, Housing Market, Fiscal Policy

JEL Classification: D31, R21, R31

Suggested Citation

Domènech-Arumí, Gerard and Gobbi, Paula E., Housing inequality and how fiscal policy shapes it: Evidence from Belgian real estate (September 29, 2023). Available at SSRN: https://ssrn.com/abstract=4588122 or http://dx.doi.org/10.2139/ssrn.4588122

Gerard Domènech-Arumí (Contact Author)

Université Libre de Bruxelles (ULB) ( email )

CP 132 Av FD Roosevelt 50
Brussels, Brussels 1050
Belgium

HOME PAGE: http://sites.google.com/site/domenechweb/

Paula E. Gobbi

Universite Libre de Bruxelles ( email )

Belgium

HOME PAGE: http://https://sites.google.com/site/gobbipaula/

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