Homeowner Subsidy Repeal and Housing Recentralization

Subsidising homeownership decentralises cities, as Muth (1967) suggested over half a century ago. This article focuses on the related question of whether repealing a homeownership subsidy recentralises cities. This question is relevant today, given the ubiquity of homeownership subsidies. We provide a first quasi-experimental test of a subsidy repeal's spatial effects by examining Germany's 2005 homeownership subsidy reform. We find that repealing the subsidy contributed to recentralising Germany's cities. Since recentralisation helps abate carbon dioxide emissions, repealing a homeownership subsidy also helps mitigate climate change.