The dynamics of household location preferences in Germany

Inspired by the literature on social polarisation and residential segregation we draw on a probabilistic approach to pursue the evolution of household location preferences. Using microdata from the German Socio-Economic Panel (SOEP) for the period 1984-2020 we demonstrate that structural economic change was accompanied by an increasing preference for residence in compact housing close to urban centres. Our analysis outlines that during the past two decades, intra-urban and urban-rural disparities by age and skills have begun to rise. Even for Germany, where segregation is moderate, any scenario suggesting neighbourhood-level convergence of living standards seems unlikely. • In Germany, basic household location preferences persist. • Over the past two decades location choices have begun to diverge. • Mean location preferences have turned towards more central urban locations. • Widening rural-urban disparities tend to corroborate the polarisation hypothesis.