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CEP discussion paper

The economic impacts of constraining home investments


We investigate how political backlash against wealthy investors in high-amenity places affects local residents. We exploit a quasi-natural experiment: the ‘Swiss Second Home Initiative’, which banned the construction of new second homes in desirable tourist locations. Consistent with our model, we find that the ban substantially lowered (increased) the price growth of primary (second) homes and increased the unemployment growth rate in the affected areas. Our findings suggest that the negative effect on local economies dominated the positive amenity-preservation effect. Constraining second home investments in locations where primary and second homes are not close substitutes may reinforce wealth inequality.


Christian A. L. Hilber and Olivier Schöni

10 July 2018     Paper Number CEPDP1556

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This CEP discussion paper is published under the centre's Urban programme.