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The Impact of Supply Constraints on House Prices in England

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  • Christian A. L. Hilber
  • Wouter Vermeulen

Abstract

We test the theoretical prediction that house prices respond more strongly to changes in local earnings in places with tight supply constraints using a unique panel dataset of 353 Local Planning Authorities in England between 1974 and 2008. Exploiting exogenous variation from a policy reform, vote shares and historical density to identify the endogenous constraints‐measures, we find that: regulatory constraints have a substantive positive impact on the house price‐earnings elasticity; the effect of constraints due to scarcity of developable land is largely confined to highly urbanised areas; and uneven topography has a quantitatively less meaningful impact.

Suggested Citation

  • Christian A. L. Hilber & Wouter Vermeulen, 2016. "The Impact of Supply Constraints on House Prices in England," Economic Journal, Royal Economic Society, vol. 126(591), pages 358-405, March.
    • Handle: RePEc:wly:econjl:v:126:y:2016:i:591:p:358-405
    DOI: 10.1111/ecoj.12213
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    JEL classification:

    • J1 - Labor and Demographic Economics - - Demographic Economics

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