Implications of homeownership policies on land prices: the case of a French experiment.

Summary We propose to estimate the price effects of a positive housing demand shock on French real estate markets. The "Interest Free Loan" system is expected to support housing demand by first-time buyers. From 2009 to mid-2010, the amount of subsidies paid to first-time buyers was increased. We evaluate the effect of this new housing policy on land parcel prices using a new methodological approach of a hybrid of difference-in-difference and matching techniques, and exploiting geographical differences in the policy design to identify possible inflationary effects. We identify significant but transitory inflationary effects suggesting that land supply elasticity is low in France.