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The impact of supply constraints on house prices in England

  • Christian A. L. Hilber

    ()

    (London School of Economics & Spatial Economics Research Centre)

  • Wouter Vermeulen

    ()

    (CPB Netherlands Bureau for Economic Policy Analysis & VU University & Spatial Economics Research Centre)

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

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Paper provided by Institut d'Economia de Barcelona (IEB) in its series Working Papers with number 2013/28.

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Length: 52 pages
Date of creation: 2013
Date of revision:
Handle: RePEc:ieb:wpaper:2013/6/doc2013-28
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