Take Back Control: Does the Remunicipalisation of Housing Lower Rents and Property Prices? Evidence from Germany

This is my MSc thesis which I submitted at LSE's Department of Government in August 2025.Abstract:While examining economic threats such as labour market shifts or economic shocks as a source of insecurity, political science literature mostly tends to ignore the fundamental transformation of housing markets. In this thesis, I intend to advance the literature by studying effects of changes in housing provision by the state on local rent and land prices. This thesis examines the case of Germany, the country with the highest share of rental housing in the EU. The case of Germany’s capital Berlin is a concise example of public housing privatization and increasing tightness of housing markets. Repurchases of housing units by state-owned housing companies from private housing companies supported by the state of Berlin serve as an example of a policy which tries to counter the increasing financialisation and price increases of housing markets. By collecting annual spatial data on housing units possessed by housing companies owned by the state of Berlin and combining it with fine-grained sociodemographic data and data on the annual development of local rent and land prices on the level of Berlin’s postcode regions, I create a novel, longitudinal spatial data set on this re-municipalisation housing policy in Berlin. Using a difference-in-differences approach (DiD) and methods of unit matching, I findon the aggregate null effects on the local rents and land prices. By additionally employing a novel estimator for continuous treatments, I demonstrate that postcode regions treated with the re-purchase of a high amount of housing units by the state might indeed register substantively lower local rents. However, different empirical limitations of my approach which raise uncertainty about my findings are also discussed. Finally, I stress that my results suggest that the design of policy reactions to tight housing markets represents an important and until now relatively neglected source of political competition.