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How responsive are housing markets in the OECD? National level estimates

Author

Listed:
  • Maria Chiara Cavalleri
  • Boris Cournède
  • Ezgi Özsöğüt

Abstract

The trend rise of house prices in many OECD countries suggests weakness in the adjustment of supply to demand. This paper estimates long-term elasticities of housing supply to prices in OECD countries before exploring their drivers with a focus on policies. It finds a significant association between weaker supply responsiveness and a proxy measure for more restrictive land-use regulation. Besides, tighter rent controls are linked with lower supply elasticities. In turn, weak supply responsiveness implies that house prices rise more following stronger demand. The sensitivity of house prices to household income is also higher in countries that provide larger amounts of tax relief for homeowners.

Suggested Citation

  • Maria Chiara Cavalleri & Boris Cournède & Ezgi Özsöğüt, 2019. "How responsive are housing markets in the OECD? National level estimates," OECD Economics Department Working Papers 1589, OECD Publishing.
    • Handle: RePEc:oec:ecoaaa:1589-en
    DOI: 10.1787/4777e29a-en
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    Citations

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    Cited by:

    1. Guillaume Chapelle & J.B. Eyméoud & C. Wolf, 2023. "Land-use regulation and housing supply elasticity: evidence from France," THEMA Working Papers 2023-08, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
    2. Carlos Cañizares Martínez & Gabe J. de Bondt & Arne Gieseck, 2023. "Forecasting housing investment," Journal of Forecasting, John Wiley & Sons, Ltd., vol. 42(3), pages 543-565, April.
    3. Egan, Paul & McQuinn, Kieran, 2023. "Regime switching and the responsiveness of prices to supply: The case of the Irish housing market," The Quarterly Review of Economics and Finance, Elsevier, vol. 87(C), pages 82-94.

    More about this item

    Keywords

    house prices; housing; land use regulation; residential construction; taxation;
    All these keywords.

    JEL classification:

    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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