CPB: Effectiveness of stimulating homeownership by bill is limited

The objective of this bill is to stimulate homeownership among low-income households by the introduction of a purchase subsidy and other measures. The proposers assume that the BEW will increase homeownership by some 6 % or 200 000 households over the next ten years. This assumption seems to be too optimistic, because in the analysis the effectiveness of the BEW is rather limited. For the lowest incomes the liquidity barrier for homeownership is not sufficiently lowered. The high (and increasing) average age of (the heads of) the targeted households also limits the effect that the BEW is expected to have on homeownership. Somewhat higher income levels are not reached by the BEW, which helps to reduce the deadweight loss. To increase the effectiveness of the BEW also the supply of cheap owner-occupied dwellings should be stimulated.