Can zoning reform increase housing construction? Evidence from Auckland

In 2016, Auckland, New Zealand upzoned approximately three-quarters of its residential land, allowing medium- and high-density housing to be built in areas previously zoned for low density. Permits for the construction of new dwellings subsequently reached record highs. We use a synthetic control method to evaluate the impact of this widespread zoning reform on housing starts. The synthetic control provides an estimate of outcomes under the counterfactual of no zoning reform and implies that the upzoning approximately doubled new dwelling permits per capita within five years of the reform becoming operational. Seven years on from the reform, cumulative permits issued exceed those of the synthetic control by approximately 52,200, forty-six percent of the 112,300 permits issued over this period. Our findings suggest that zoning reform can expand housing supply in other jurisdictions where regulatory constraints on land use have prevented dwelling construction from keeping pace with demand-side pressures such as population growth.