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House Prices and Growth with Fixed Land Supply

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  • David Miles
  • James Sefton

Abstract

We analyse housing costs and patterns of residential development over the long term in a dynamic general equilibrium. We show that in a growing economy the speed of travel improvements is crucial to the evolution of land and house prices. We derive a condition for the rate of change in transport efficiency that generates flat land and house prices on a balanced growth path. We present evidence that this condition was satisfied in many countries between the mid-nineteenth century and the mid-twentieth century, but since then passenger transport improvements have slowed down with major implications for how house prices evolve.

Suggested Citation

  • David Miles & James Sefton, 2021. "House Prices and Growth with Fixed Land Supply," The Economic Journal, Royal Economic Society, vol. 131(636), pages 1815-1848.
    • Handle: RePEc:oup:econjl:v:131:y:2021:i:636:p:1815-1848.
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    File URL: http://hdl.handle.net/10.1093/ej/ueaa088
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    Cited by:

    1. Graeme Guthrie, 2023. "Land Hoarding and Urban Development," The Journal of Real Estate Finance and Economics, Springer, vol. 67(4), pages 753-793, November.

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