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The impact of supply constraints on house prices in England

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  • Christian A. L. Hilber

    ()
    (London School of Economics & Spatial Economics Research Centre)

  • Wouter Vermeulen

    ()
    (CPB Netherlands Bureau for Economic Policy Analysis & VU University & Spatial Economics Research Centre)

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 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 Institut d'Economia de Barcelona (IEB) in its series Working Papers with number 2013/28.

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Length: 52 pages
Date of creation: 2013
Date of revision:
Handle: RePEc:ieb:wpaper:2013/6/doc2013-28

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

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References

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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. Giulia Faggio & Henry G. Overman, 2012. "The Effect of Public Sector Employment on Local Labour Markets," SERC Discussion Papers 0111, Spatial Economics Research Centre, LSE.
  2. 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.
  3. 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).
  4. Giulia Faggio, 2014. "Relocation of Public Sector Workers: Evaluating a Place-based Policy," SERC Discussion Papers 0155, Spatial Economics Research Centre, LSE.
  5. Philippe Bracke & Christian Hilber & Olmo Silva, 2012. "Homeownerhip and Entrepreneurship," SERC Discussion Papers 0103, Spatial Economics Research Centre, LSE.
  6. 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.

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