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The Impact of Supply Constraints on House Prices in England

  • Wouter Vermeulen

    ()

  • Christian A.L. Hilber

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: Regulatory constraints have a substantive positive long-run impact on the house price-earnings elasticity; The effect of constraints due to scarcity of developable land is largely confined to highly urbanised areas; Uneven topography has a quantitatively less meaningful impact; The effects of supply constraints are greater during boom than bust periods.

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Paper provided by CPB Netherlands Bureau for Economic Policy Analysis in its series CPB Discussion Paper with number 219.

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Date of creation: Oct 2012
Handle: RePEc:cpb:discus:219
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