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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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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, 2014. "Relocation of Public Sector Workers: Evaluating a Place-based Policy," SERC Discussion Papers, Spatial Economics Research Centre, LSE 0155, Spatial Economics Research Centre, LSE.
  2. 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.
  3. Christian A. L. Hilber & Teemu Lyytikainen & Wouter Vermeulen, 2010. "Capitalization of central government grants into local house prices: panel data evidence from England," LSE Research Online Documents on Economics, London School of Economics and Political Science, LSE Library 31778, London School of Economics and Political Science, LSE Library.
  4. Paul Cheshire & Gerard Dericks, 2013. "Regulation, Rents and ?Iconic Design?: rent acquisition by design in the tightly constrained London office market," ERSA conference papers ersa13p1071, European Regional Science Association.
  5. Paul Cheshire & Gerard Dericks, 2014. "'Iconic Design' as Deadweight Loss: Rent Acquisition by Design in the Constrained London Office Market," SERC Discussion Papers, Spatial Economics Research Centre, LSE 0154, Spatial Economics Research Centre, LSE.
  6. Wouter Vermeulen & Maarten Allers, 2013. "Fiscal Equalization and Capitalization: Evidence from a Policy Reform," CPB Discussion Paper, CPB Netherlands Bureau for Economic Policy Analysis 245, CPB Netherlands Bureau for Economic Policy Analysis.
  7. Christian A. L. Hilber & Tracy M. Turner, 2010. "The Mortgage Interest Deduction and its Impact on Homeownership Decisions," SERC Discussion Papers, Spatial Economics Research Centre, LSE 0055, Spatial Economics Research Centre, LSE.
  8. 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).

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