This paper compares a number of housing policies such as housing taxation, land use and rental regulations and social housing policies for OECD countries relying on new data. Based on a range of econometric analyses, it also investigates whether these housing-related policies achieve their objectives in an efficient and equitable way and whether there are any side effects on other aspects of housing markets or on the wider economy. One main finding is that badly-designed policies can have substantial negative effects on the economy, for instance by increasing the level and volatility of real house prices and preventing people from moving easily to follow employment opportunities. The paper makes some recommendations for the design of efficient and equitable housing policies that can improve the functioning of housing markets and contribute to macroeconomic stability and growth.

Housing warrants attention for several reasons. It is an important element of wealth as well as the single biggest expenditure for a majority of households and, as witnessed by the recent financial and economic crisis, housing market outcomes can have repercussions for the macroeconomy. A well-functioning housing market supporting geographical mobility is also necessary to ensure efficient labour market outcomes. Housing also deserves attention for social reasons, inter alia because adequate housing may enhance children’s opportunities for educational achievement and their future employment. A wide range of public policies affects the housing market. Such policies are justified on the basis of repairing market failures, pursuing broader economic efficiency goals and a desire to influence the housing opportunities available to citizens. These interventions include fiscal measures (such as subsidies and taxes), direct provision of social housing (i.e. housing let/sold at below-market rents and/or allocated by non-market mechanisms) and regulations aimed at influencing rental markets, as well as the quantity, quality and allocation of dwellings. They also involve public resources being directed to redistribute income by supporting housing consumption (e.g. housing allowances).