Can Policy Stimulants Increase Housing Supply in Run-down Areas

Fragmentation of ownership in land, among others, has hindered the redevelopment of inner city of Taipei. It is believed that the sluggish land redevelopment is partly responsible for a high housing price and also continuing deterioration of old neighborhoods. In response to those problems, Taipei city government has over the years granted developers additional floor spaces to incentivize a faster redevelopment and more housing supply in designated areas where neighborhood deterioration is severe. We incorporate several sets of data so as to answer the question that if this policy works. The building activities such as project number and size between designated areas and others, before and after the major legislations are compared. We attempt to understand, through this kind of comparison, whether the provision of additional floor spaces, as a policy stimulant, have effectively amalgamated land parcels and consequently increased housing supply in those designated run-down areas.