Supply side effects of the Berlin rent freeze

We analyse how the rent cap part of the legislation which fixed rents at below market levels affected the supply side in the short term. We find rent decreases accompanied by decreases in supply five times as large. We further investigate spillover effects on the purchase market, regionally heterogeneous effects as well as different effects by dwelling characteristics. We find the rent freeze did not have spillover effects on dwellings for sale which point to a ‘wait-and-see-attitude’ on the investors’ side. We make use of a rich dataset of real estate advertisements and employ hedonic difference-in-difference and triple-difference estimation strategies.