G. Toussaint, Arnaud Simon
Using machine learning methods to appraise rental returns on an original rental dataset, we estimate a difference-in-differences (DiD) model to test the effect of rent control (RC) on rents, transaction prices, and rental returns in Lille, Lyon, Montpellier and Bordeaux, France. By bringing a financial perspective to public policy analysis, we show that the introduction of RC, a tool that is the subject of extensive debate in economic literature, presents a mixed picture for the housing market. Specifically, RC (i) has not led to lower rents relative to the control group—rents in Lyon even rose faster than in the control group, despite some evidence of a slowing pace of increase, (ii) has led to a decrease in prices in Lyon, and (iii) has led to an increase in rental returns in Lyon. These results run counter to some predictions of the stock-flow model. This article examines rental investment from a broader perspective, noting that returns have declined in recent decades, largely due to sharp price increases. This long-term decoupling, in addition to tax benefits on other financial products, might compose a generalized context unfavorable to private housing investments.