Making it more expensive for rich foreigners to buy their way into a country just ends up making rent spike in all the neighboring towns instead.
When Greece doubled the minimum real estate investment required for residency in popular municipalities, it created a 'balloon effect' where buyers flooded the nearest 'cheap' markets. This distorted housing costs in areas that weren't originally facing affordability crises.
Threshold-Based Policies and Distortions in Housing Markets
SSRN · 6441680
This paper examines how investment thresholds embedded in residence-by-investment programmes shape housing market outcomes. The analysis exploits a reform of Greece’s golden visa scheme that selectively doubled the minimum real estate investment requirement - from €250,000 to €500,000 - across municipalities. Using comprehensive administrative data on property transactions from 2017-2024, the study combines a bunching framework with a difference-in-differences design to identify behavioural resp