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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
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Handle: RePEc:cpb:discus:219
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  1. Hilber, Christian A. L., 2007. "New Housing Supply and the Dilution of Social Capital," MPRA Paper 11620, University Library of Munich, Germany, revised 14 Nov 2008.
  2. Muellbauer, J & Murphy, A, 1996. "Booms and Busts in the UK Housing Market," Economics Papers 125, Economics Group, Nuffield College, University of Oxford.
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  7. Hilber, Christian A.L., 2005. "Neighborhood externality risk and the homeownership status of properties," Journal of Urban Economics, Elsevier, vol. 57(2), pages 213-241, March.
  8. Raffaella Sadun, 2008. "Does Planning Regulation Protect Independent Retailers?," CEP Discussion Papers dp0888, Centre for Economic Performance, LSE.
  9. Christian A. L. Hilber & Frédéric Robert-Nicoud, 2011. "On The Origins Of Land Use Regulations: Theory And Evidence From Us Metro Areas," Research Papers by the Institute of Economics and Econometrics, Geneva School of Economics and Management, University of Geneva 11081, Institut d'Economie et Econométrie, Université de Genève.
  10. Saku Aura & Thomas Davidoff, 2006. "Supply Constraints and Housing Prices," CESifo Working Paper Series 1738, CESifo Group Munich.
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  16. Glaeser, Edward L. & Ward, Bryce A., 2009. "The causes and consequences of land use regulation: Evidence from Greater Boston," Journal of Urban Economics, Elsevier, vol. 65(3), pages 265-278, May.
  17. Tracy M. Turner, 2003. "Does Investment Risk Affect the Housing Decisions of Families?," Economic Inquiry, Western Economic Association International, vol. 41(4), pages 675-691, October.
  18. Paciorek, Andrew, 2013. "Supply constraints and housing market dynamics," Journal of Urban Economics, Elsevier, vol. 77(C), pages 11-26.
  19. Marcy Burchfield & Henry G. Overman & Diego Puga & Matthew A. Turner, 2005. "Causes of sprawl: A portrait from space," Working Papers tecipa-192, University of Toronto, Department of Economics.
  20. Hilber, Christian A. L., 2007. "New Housing Supply and the Dilution of Social Capital," MPRA Paper 5134, University Library of Munich, Germany.
  21. Albert Saiz, 2010. "The Geographic Determinants of Housing Supply," The Quarterly Journal of Economics, MIT Press, vol. 125(3), pages 1253-1296, August.
  22. John Muellbauer & Gavin Cameron & John Muellbauer, 2006. "Was There A British House Price Bubble? Evidence from a Regional Panel," Economics Series Working Papers 276, University of Oxford, Department of Economics.
  23. John M. Quigley & Steven Raphael, 2005. "Regulation and the High Cost of Housing in California," American Economic Review, American Economic Association, vol. 95(2), pages 323-328, May.
  24. Paul Cheshire & Christian A.L. Hilber, 2007. "Office space supply restrictions in Britain: the political economy of market revenge," LSE Research Online Documents on Economics 3203, London School of Economics and Political Science, LSE Library.
  25. Hilber, Christian A.L., 2010. "New housing supply and the dilution of social capital," Journal of Urban Economics, Elsevier, vol. 67(3), pages 419-437, May.
  26. Cheshire, Paul & Hilber, Christian A. L., 2007. "Office Space Supply Restrictions in Britain: The Political Economy of Market Revenge," MPRA Paper 5435, University Library of Munich, Germany.
  27. Edward L. Glaeser & Joseph Gyourko, . "Urban Decline and Durable Housing," Zell/Lurie Center Working Papers 382, Wharton School Samuel Zell and Robert Lurie Real Estate Center, University of Pennsylvania.
  28. G Bramley, 1998. "Measuring planning: indicators of planning restraint and its impact on housing land supply," Environment and Planning B: Planning and Design, Pion Ltd, London, vol. 25(1), pages 31-57, January.
  29. Todd M. Sinai & Nicholas S. Souleles, 2009. "Can Owning a Home Hedge the Risk of Moving?," NBER Working Papers 15462, National Bureau of Economic Research, Inc.
  30. Hilber, Christian A.L. & Mayer, Christopher, 2009. "Why do households without children support local public schools? Linking house price capitalization to school spending," Journal of Urban Economics, Elsevier, vol. 65(1), pages 74-90, January.
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  32. Glaeser, Edward L & Gyourko, Joseph & Saks, Raven, 2005. "Why Is Manhattan So Expensive? Regulation and the Rise in Housing Prices," Journal of Law and Economics, University of Chicago Press, vol. 48(2), pages 331-69, October.
  33. Saks, Raven E., 2008. "Job creation and housing construction: Constraints on metropolitan area employment growth," Journal of Urban Economics, Elsevier, vol. 64(1), pages 178-195, July.
  34. Mayo, Stephen & Sheppard, Stephen, 2001. "Housing Supply and the Effects of Stochastic Development Control," Journal of Housing Economics, Elsevier, vol. 10(2), pages 109-128, June.
  35. Cheshire, Paul & Sheppard, Stephen, 1995. "On the Price of Land and the Value of Amenities," Economica, London School of Economics and Political Science, vol. 62(246), pages 247-67, May.
  36. Timothy J. Bartik, 1991. "Who Benefits from State and Local Economic Development Policies?," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number wbsle, March.
  37. Harter-Dreiman, Michelle, 2004. "Drawing inferences about housing supply elasticity from house price responses to income shocks," Journal of Urban Economics, Elsevier, vol. 55(2), pages 316-337, March.
  38. Christian A. L. Hilber & Christopher J. Mayer, 2004. "Why Do Households Without Children Support Local Public Schools?," NBER Working Papers 10804, National Bureau of Economic Research, Inc.
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