IDEAS home Printed from https://ideas.repec.org/p/osf/socarx/tbe9c_v1.html

From land prices to construction deficits: Understanding housing overappreciation in Santiago

Author

Listed:
  • Lopez-Morales, Ernesto

Abstract

During the 2010s, Chile experienced significant housing overvaluation and unaffordability. This chapter challenges the prevailing belief that land costs for developers are the primary cause of this issue. This study analyzes official data from Santiago, the capital city, showing that, on average, land costs for developers did not increase but slightly decreased between 2010 and 2019 due to fewer public restrictions on residential density. This indicates that land costs alone cannot explain the substantial rise in housing prices. This study investigates the impact of other economic and political factors on housing overappreciation, finding a surge in housing demand due to immigration and a shortage of new housing constructed since 2000 as a more probable cause. This supply shortage led to higher housing prices and rents, while housing demand became increasingly inelastic to absorb them. This study explores potential reasons for the lack of new housing construction and highlights the possibility of developers’ collusion, being a shortcoming of Chile’s neoliberal housing market. Finally, this study offers suggestions for improving market competitiveness, boosting new housing construction, and thus improving housing affordability in Chile.

Suggested Citation

  • Lopez-Morales, Ernesto, 2026. "From land prices to construction deficits: Understanding housing overappreciation in Santiago," SocArXiv tbe9c_v1, Center for Open Science.
    • Handle: RePEc:osf:socarx:tbe9c_v1
    DOI: 10.31219/osf.io/tbe9c_v1
    as

    Download full text from publisher

    File URL: https://osf.io/download/69ea6e6df0a1e296e0f4e43f/
    Download Restriction: no
    File URL: https://libkey.io/10.31219/osf.io/tbe9c_v1?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Gil-Alana, Luis Alberiko & Dettoni, Robinson & Costamagna, Rodrigo & Valenzuela, Mario, 2019. "Rational bubbles in the real housing stock market: Empirical evidence from Santiago de Chile," Research in International Business and Finance, Elsevier, vol. 49(C), pages 269-281.
    2. Fernando Lefort & Miguel Vargas, 2011. "Tacit Collusion in the Santiago Housing Market," Research Department Publications 4735, Inter-American Development Bank, Research Department.
    3. Mi Shih & Hsiu-tzu Betty Chang & Frank J. Popper, 2018. "Development Rights: Regulating Vertical Urbanism in Taiwan," Planning Theory & Practice, Taylor & Francis Journals, vol. 19(5), pages 717-733, October.
    4. Brueckner, Jan K, 1997. "Consumption and Investment Motives and the Portfolio Choices of Homeowners," The Journal of Real Estate Finance and Economics, Springer, vol. 15(2), pages 159-180, October.
    5. Fernando Lefort & Miguel Vargas, 2011. "Tacit Collusion in the Santiago Housing Market," Research Department Publications 4735, Inter-American Development Bank, Research Department.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Matthew Chambers & Carlos Garriga & Don E. Schlagenhauf, 2009. "Accounting For Changes In The Homeownership Rate," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 50(3), pages 677-726, August.
    2. Philippe Bracke & Christian Hilber & Olmo Silva, 2014. "Homeownership and Entrepreneurship: The Role of Mortgage Debt and Commitment," CESifo Working Paper Series 5048, CESifo.
    3. Hochguertel, Stefan & van Soest, Arthur, 2001. "The Relation between Financial and Housing Wealth: Evidence from Dutch Households," Journal of Urban Economics, Elsevier, vol. 49(2), pages 374-403, March.
    4. Todd Sinai & Nicholas S. Souleles, 2005. "Owner-Occupied Housing as a Hedge Against Rent Risk," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 120(2), pages 763-789.
    5. Ju Tjung Liong & Helga Leitner & Eric Sheppard & Suryono Herlambang & Wahyu Astuti, 2020. "Space Grabs: Colonizing the Vertical City," International Journal of Urban and Regional Research, Wiley Blackwell, vol. 44(6), pages 1072-1082, November.
    6. Sewin Chan, 1998. "Spatial Lock-in: Do Falling House Prices Constrain Residential Mobility?," Departmental Working Papers 199816, Rutgers University, Department of Economics.
    7. Liang Peng & Lei Zhang, 2021. "House Prices and Systematic Risk: Evidence from Microdata," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 49(4), pages 1069-1092, December.
    8. Niron, Semin & Turk, Sevkiye Sence, 2023. "Using transfer of development rights (TDR) in a legally ambiguous context: Istanbul case," Land Use Policy, Elsevier, vol. 135(C).
    9. Flavin, Marjorie & Yamashita, Takashi, 1998. "Owner-Occupied Housing and the Composition of the Household Portfolio over the Life Cycle," University of California at San Diego, Economics Working Paper Series qt89x293v9, Department of Economics, UC San Diego.
    10. Thissen, M.J.P.M. & Burger, M.J. & van Oort, F.G., 2010. "House Prices, Bubbles and City Size," ERIM Report Series Research in Management ERS-2010-030-ORG, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.
    11. Mi Shih & Ying-Hui Chiang, 2024. "A politically less contested and financially more calculable urban future: Density techniques and heightened land commodification in Taiwan," Environment and Planning A, , vol. 56(6), pages 1753-1770, September.
    12. Ji, Tingting, 2004. "Consumer Credit Delinquency And Bankruptcy Forecasting Using Advanced Econometrc Modeling," MPRA Paper 3187, University Library of Munich, Germany.
    13. Riccardo Calcagno & Maria Cesira Urzi Brancati, 2014. "Do more financially literate households invest less in housing? Evidence from Italy," Economics Bulletin, AccessEcon, vol. 34(1), pages 430-445.
    14. James Banks & Richard Blundell & Zoë Oldfield & James P. Smith, 2016. "House Price Volatility and the Housing Ladder," NBER Chapters, in: Insights in the Economics of Aging, pages 87-119, National Bureau of Economic Research, Inc.
    15. Robert Webb & Duncan Watson & Steven Cook, 2021. "Price adjustment in the London housing market," Urban Studies, Urban Studies Journal Limited, vol. 58(1), pages 113-130, January.
    16. Manish Gupta, 2012. "What factors affect hedging incentives of housing demand?," ERES eres2012_118, European Real Estate Society (ERES).
    17. Felici, Marco & Fuerst, Franz, 2023. "The heterogeneous relationship of owner-occupied and investment property with household portfolio choice," Journal of Housing Economics, Elsevier, vol. 62(C).
    18. Waggle, Doug & Johnson, Don T., 2009. "Homeownership and mixed-asset portfolio allocations," The Quarterly Review of Economics and Finance, Elsevier, vol. 49(2), pages 484-500, May.
    19. Hilber, Christian A.L. & Liu, Yingchun, 2008. "Explaining the black-white homeownership gap: The role of own wealth, parental externalities and locational preferences," Journal of Housing Economics, Elsevier, vol. 17(2), pages 152-174, June.
    20. Andrew C. Worthington, 2009. "Household Asset Portfolio Diversification: Evidence from the Household, Income and Labour Dynamics in Australia (HILDA) Survey," Discussion Papers in Finance finance:200908, Griffith University, Department of Accounting, Finance and Economics.

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:osf:socarx:tbe9c_v1. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: OSF (email available below). General contact details of provider: https://arabixiv.org .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.