Assessing Rental Price Dynamics in Two Gentrified Neighbourhoods in Cologne by Means of a Dwelling Panel

Abstract

One major focus of urban research is the study of neighbourhood change over time. We argue that a dwelling panel, i.e., a panel in which dwellings are the sample unit, is the most appropriate method to study such changes, e.g., the process of gentrification or rental price dynamics. In this paper, we contextualize recent rent trends in urban neighbourhoods in Germany within both the theoretical background of gentrification processes and the legal framework of the German rental market. Then, we compare several methods for assessing rent price dynamics and introduce the dwelling panel as a method for studying rent trends in neighbourhoods. In the analyses, we particularly focus on the comparison between the increases in the costs of existing rental contracts and those of rents for new leases in two neighbourhoods that are in different phases of the gentrification process. We use face-to-face interview data from the Cologne Dwelling Panel (Friedrichs & Blasius 2015, 2020) with four waves conducted between 2010 and 2014. In the first wave, we collected data from 1,009 residents, in the fourth wave from 747 residents. Applying fixed-effects regressions with the dwellings as units of analysis enables us to control for unobserved heterogeneity in the dwellings’ features, while the effects of tenant changes, changes in household composition, and rental trends over time can be differentiated.