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Zoning ordinances and the housing market in developing countries: Evidence from Brazilian municipalities

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  • Lima, Ricardo Carvalho de Andrade
  • Silveira Neto, Raul da Mota

Abstract

Due to recent urbanization and the increased population density around major Brazilian cities, the real estate market in the country has appreciated greatly. In addition to demand-related factors, mechanisms with the potential to limit the housing supply may have also affected the price increase in that market. The objective of this study is to investigate the impact of zoning ordinances (land-use regulations) on the average rental prices and the growth in the number of dwellings in Brazil. Through an intercity analysis and using identification methods that rely both on selection on observable and unobservable covariates, the set of evidence indicates that zoning ordinance is associated with an increment ranging from 5.3% to 6% in average rents, but does not affect the dwellings growth. Sensitivity analysis suggests that these results are not simply driven by unobservable confounders. Our evidence, thus, indicates that even being a usually well-intentioned policy, zoning ordinances tend to generate social costs that need to be taken into account in the analysis of the real-estate market in Brazil.

Suggested Citation

  • Lima, Ricardo Carvalho de Andrade & Silveira Neto, Raul da Mota, 2019. "Zoning ordinances and the housing market in developing countries: Evidence from Brazilian municipalities," Journal of Housing Economics, Elsevier, vol. 46(C).
    • Handle: RePEc:eee:jhouse:v:46:y:2019:i:c:s1051137718302080
    DOI: 10.1016/j.jhe.2019.101653
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    More about this item

    Keywords

    Land use restrictions; Urban zoning; Urban development; Public policy;
    All these keywords.

    JEL classification:

    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets
    • R52 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Land Use and Other Regulations
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation

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