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The Impact of Supply Constraints on House Prices in England

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  • Christian A. L. Hilber
  • Wouter Vermeulen

Abstract

We explore the impact of different types of supply constraints on house prices in England by exploiting a unique panel dataset of 353 local planning authorities ranging from 1974 to 2008. Using exogenous variation from a policy reform, vote shares and historical density to identify the endogenous constraints-measures, we find that: i) Regulatory constraints have a substantive positive long-run impact on the house price-earnings elasticity; ii) The effect of constraints due to scarcity of developable land is largely confined to highly urbanised areas; iii) Uneven topography has a quantitatively less meaningful impact; and iv) The effects of supply constraints are greater during boom than bust periods.

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Bibliographic Info

Paper provided by Spatial Economics Research Centre, LSE in its series SERC Discussion Papers with number 0119.

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Date of creation: Sep 2012
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Handle: RePEc:cep:sercdp:0119

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Web page: http://www.spatialeconomics.ac.uk/SERC/publications/default.asp

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Keywords: House prices; housing supply; supply constraints; land use regulation;

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References

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Citations

Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. The weekly papers
    by ? in Free Exchange on 2012-10-24 17:00:32
  2. Help to Buy will likely have the effect of pushing up house prices further, making housing become less – not more – affordable for young would-be-owners
    by Blog Admin in British Politics and Policy at LSE on 2013-06-25 13:00:27
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Cited by:
  1. Faggio, Giulia & Overman, Henry, 2014. "The effect of public sector employment on local labour markets," Journal of Urban Economics, Elsevier, vol. 79(C), pages 91-107.
  2. Bracke, Philippe & Hilber, Christian & Silva, Olmo, 2013. "Homeownership and Entrepreneurship: The Role of Commitment and Mortgage Debt," IZA Discussion Papers 7417, Institute for the Study of Labor (IZA).
  3. Philippe Bracke & Christian Hilber & Olmo Silva, 2012. "Homeownerhip and Entrepreneurship," SERC Discussion Papers 0103, Spatial Economics Research Centre, LSE.
  4. Christian A. L. Hilber & Tracy M. Turner, 2010. "The Mortgage Interest Deduction and its Impact on Homeownership Decisions," SERC Discussion Papers 0055, Spatial Economics Research Centre, LSE.
  5. Giulia Faggio, 2014. "Relocation of Public Sector Workers: Evaluating a Place-based Policy," SERC Discussion Papers 0155, Spatial Economics Research Centre, LSE.
  6. Wouter Vermeulen & Maarten Allers, 2013. "Fiscal Equalization and Capitalization: Evidence from a Policy Reform," CPB Discussion Paper 245, CPB Netherlands Bureau for Economic Policy Analysis.

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