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Housing supply elasticity in local government areas of Sydney

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  • Xiangling Liu
  • Glenn Otto

Abstract

We report supply elasticity estimates of residential property (houses and apartments) for local government areas (LGAs) in metropolitan Sydney. Using annual data for 1991–2012, the average supply elasticity estimate across all LGAs is 0.2 for houses and 0.8 for apartments. The supply of houses is inelastic in all 43 LGAs; in contrast, apartment supply is elastic – greater than unity – in about one-third of LGAs. We develop theoretical and empirical models to explain the cross-section variation in supply elasticity across LGAs. For houses, supply elasticity is negatively related to an LGA’s population density, the time taken by a local council to process a development application and to different measures of the amount of land in an LGA that is unavailable for new housing development. In contrast to houses, variation in supply elasticity for apartments across LGAs is unrelated to any of the available regressors.

Suggested Citation

  • Xiangling Liu & Glenn Otto, 2017. "Housing supply elasticity in local government areas of Sydney," Applied Economics, Taylor & Francis Journals, vol. 49(53), pages 5441-5461, November.
    • Handle: RePEc:taf:applec:v:49:y:2017:i:53:p:5441-5461
    DOI: 10.1080/00036846.2017.1307936
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    Cited by:

    1. Liu, Xiangling, 2019. "The income elasticity of housing demand in New South Wales, Australia," Regional Science and Urban Economics, Elsevier, vol. 75(C), pages 70-84.

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