From the Center to the Outskirts: How Homeownership Subsidies Contribute to Urban Flight

The goal of increasing the homeownership rate has been a common theme running in German housing policy in recent decades. This article highlights a largely unknown, unintended side effect of the promotion of homeownership in the form of the more recent German subsidies "Eigenheimzulage" and "Baukindergeld." Homeownership is predominantly achieved in the suburbs or on the outskirts of cities, which means that the promotion of homeownership simultaneously functions as a subsidy for suburbanization. This is associated with negative side effects such as an increased ecological footprint. Considering the high fiscal costs, the promotion of homeownership should be subjected to a holistic cost-benefit analysis.