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The Price Responsiveness of Housing Supply in OECD Countries

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  • Aida Caldera Sánchez
  • Åsa Johansson

Abstract

The responsiveness of housing supply to changes in prices bears important implications for the evolution of housing prices and the speed of adjustment of housing markets. This paper estimates the long-run price elasticity of new housing supply in 21 OECD countries based on a stock-flow model of the housing market estimated within an error correction framework. Estimates suggest that housing supply responsiveness to price changes varies substantially across countries. New housing supply is relatively more flexible in North America and some Nordic countries, while it is more rigid in continental European countries and in the United Kingdom. The responsiveness of housing supply depends not only on national geographical and urban characteristics but also on policies, such as land use and planning regulations. The estimates are broadly in line with the limited available evidence on the responsiveness of housing supply in OECD countries. La Réactivité de l'Offre de Logements dans les Pays de l'OCDE La réactivité de l'offre de logements à l'évolution des prix a des implications importantes pour l'évolution des prix du logement et la vitesse d'ajustement des marchés du logement. Ce document estime l'élasticité-prix à long terme de l'offre de nouveaux logements dans 21 pays de l'OCDE basée sur une approche stock-flux du marché du logement et un modèle à correction d’erreurs. Selon les estimations, la réactivité de l'offre de logements aux changements de prix varie considérablement selon les pays. L’offre de logements nouveaux est relativement plus souple en Amérique du Nord et certains pays nordiques, tandis qu'elle est plus rigide dans les pays du continent européen et au Royaume-Uni. La réactivité de l'offre ne dépend pas seulement des caractéristiques géographiques et urbaines, mais aussi des politiques publiques, telles que les règles d'urbanisme et d'utilisation du sol. Les estimations sont globalement en ligne avec les rares estimations disponibles sur la réactivité de l'offre de logements dans les pays de l'OCDE.

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Bibliographic Info

Paper provided by OECD Publishing in its series OECD Economics Department Working Papers with number 837.

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Date of creation: 26 May 2011
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Handle: RePEc:oec:ecoaaa:837-en

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Keywords: land use regulation; housing prices; housing market; housing supply; offre de logements; Règles d'utilisation du sol; prix des logements; marché des logements;

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Cited by:
  1. Reserve Bank of New Zealand, 2011. "Submission to the Productivity Commission inquiry on housing affordability," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 74, pages 30-38, September.
  2. Christophe Andre & Rangan Gupta & Patrick T. Kanda, 2012. "Do House Prices Impact Consumption and Interest Rate? Evidence from OECD Countries using an Agnostic Identification Procedure," Applied Economics Quarterly (formerly: Konjunkturpolitik), Duncker & Humblot, Berlin, vol. 58(1), pages 19-70.
  3. Bas Jacobs, 2013. "From Optimal Tax Theory to Applied Tax Policy," CESifo Working Paper Series 4151, CESifo Group Munich.

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