The effect of low-income rental housing construction on local house prices: Evidence on social mixing from Amsterdam

Source abstract

This paper examines spillover effects of new construction of low-income rental housing on nearby housing sales price. As our case study, we use Amsterdam, one of the most expensive cities in Europe, yet a city with a historically large share of low-income rental housing. We combine housing sales data with unique register data on new construction that includes unique information on mixing status at project level. Such information makes it feasible to distinguish pure low-income rental housing from mixed-income and market-rate housing. Our findings point to a positive spillover effect of new pure low-income rental housing construction on nearby house prices; the spillover effect is greater for infill development than for redevelopment, and in high-income neighborhoods with a higher proportion of native Dutch residents than recorded in other neighborhoods. Given the limited scope for a supply effect from the new low-income rental housing in the local housing market, we interpret this positive spillover effect as consistent with amenity provision associated with new housing construction.