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House Prices, Housing Development Costs, and the Supply of New Single-Family Housing in German Counties and Cities

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  • Oliver Lerbs
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    Abstract

    This paper employs panel data on 413 German counties and cities from 2004 to 2009 to investigate the supply of new single-family housing in local housing markets. New local housing supply is measured by the annual number of construction permits in relation to the existing single-family housing stock. This supply indicator is econometrically related to existing home prices and new housing development costs, which include the costs of housing construction and vacant land in a given location. The results suggest that both higher prices for existing homes and recent increases in development costs are positively associated with local single-family home permit rates. Instead, higher levels of development costs turn out to dampen construction activity. The average local price elasticity of new single-family home supply is considerably less than one, with surprising differences across the urban hierarchy.

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    File URL: http://www.wiwi.uni-muenster.de/cawm/forschen/Download/Diskbeitraege/DP_57_Lerbs_Single_family_housing.pdf
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    Bibliographic Info

    Paper provided by Institute of Spatial and Housing Economics, Munster Universitary in its series Working Papers with number 201283.

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    Handle: RePEc:muc:wpaper:201283

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    Keywords: New housing supply; local housing markets; panel data;

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