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Kristof Dascher’s (2005) hypothesis that the level of vacant accommodation in eastern Germany can be mitigated by lowering housing rents can be countered by an argument based on alternative, but market-oriented costs from the housing economy, which postulates that from the owners’ point of view the alternatives of demolition, vacancy or rental can be optimal depending on the situation. However, if the gross rent level is reduced by 20% the reservation rent level is reached where owners become indifferent between rental and vacancy. In view of the low elasticities in housing demand, such rent reductions are far from sufficient to eradicate vacancies.

jahrbücher für nationalökonomie und statistik

Mietpreissenkungen lösen das Leerstandsproblem nicht / Reductions of Rents do not Solve the East German Vacancy Problem: Eine Replik zu Kristof Dascher (2005), Zum Abriß des Deutschen Wohnungsleerstandes, Jahrbücher für Nationalökonomie und Statistik, 225/4, S. 482-498 / A Reply to Kristof Dascher (2005), Zum Abriss des Deutschen Wohnungsleerstandes, Jahrbuecher fuer Nationaloekonomie und Statistik, 225/4, pp. 482-498