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Urban Structure and Housing Prices: Some Evidence from Australian Cities

Author Info

  • Mariano Kulish

    (Reserve Bank of Australia)

  • Anthony Richards

    (Reserve Bank of Australia)

  • Christian Gillitzer

    (Reserve Bank of Australia)

Abstract

This paper studies determinants of some aspects of the structure of cities, including density and the price of land and housing. We use a version of the Alonso-Muth-Mills model, calibrated to broadly match some of the features of a representative large city. While the calibrated model omits many real-world features, it can nonetheless be used to explore the impact of factors such as: (i) the provision of transport infrastructure; (ii) zoning policies that limit housing density; (iii) frictions on the production of housing; and (iv) population size. The empirical section of the paper shows that the model is consistent with some empirical regularities for large Australian cities. The results of the paper draw attention to structural factors that may have contributed to developments in the Australian housing market in recent years.

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Paper provided by Reserve Bank of Australia in its series RBA Research Discussion Papers with number rdp2011-03.

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Date of creation: Sep 2011
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Handle: RePEc:rba:rbardp:rdp2011-03
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Keywords: housing; housing prices; land prices; zoning; land use;

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Find related papers by JEL classification:
  • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
  • R52 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Land Use and Other Regulations
  • R58 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Regional Development Planning and Policy

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  1. Richard K. Green & Stephen Malpezzi & Stephen K. Mayo, 1999. "Metropolitan-Specific Estimates of the Price Elasticity of Supply of Housing, and Their Sources," Wisconsin-Madison CULER working papers 99-16, University of Wisconsin Center for Urban Land Economic Research.
  2. Edward L. Glaeser & Joseph Gyourko & Raven E. Saks, 2005. "Why Have Housing Prices Gone Up?," Harvard Institute of Economic Research Working Papers 2061, Harvard - Institute of Economic Research.
  3. Dan Andrews & Aida Caldera Sánchez & Åsa Johansson, 2011. "Housing Markets and Structural Policies in OECD Countries," OECD Economics Department Working Papers 836, OECD Publishing.
  4. Luci Ellis, 2006. "Housing and Housing Finance: The View from Australia and Beyond," RBA Research Discussion Papers rdp2006-12, Reserve Bank of Australia.
  5. Aura, Saku & Davidoff, Thomas, 2008. "Supply constraints and housing prices," Economics Letters, Elsevier, vol. 99(2), pages 275-277, May.
  6. P. C. Cheshire & Stephen Charles Sheppard, 2005. "The introduction of price signals into land use planning decision-making : a proposal," LSE Research Online Documents on Economics 568, London School of Economics and Political Science, LSE Library.
  7. Anas, Alex & Arnott, Richard & Small, Kenneth A., 1997. "Urban Spatial Structure," University of California Transportation Center, Working Papers qt835049q3, University of California Transportation Center.
  8. Bertaud, Alain & Brueckner, Jan K., 2005. "Analyzing building-height restrictions: predicted impacts and welfare costs," Regional Science and Urban Economics, Elsevier, vol. 35(2), pages 109-125, March.
  9. 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.
  10. Paul Cheshire & Stephen Sheppard, 2004. "The Introduction of Price Signals into Land Use Planning," Urban/Regional 0410002, EconWPA.
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Cited by:

  1. Christian Gillitzer & Jin Cong Wang, 2015. "Housing Wealth Effects: Cross-sectional Evidence from New Vehicle Registrations," RBA Research Discussion Papers rdp2015-08, Reserve Bank of Australia.
  2. Abelson, Peter & Joyeux, Roselyne & Mahuteau, Stephane, 2012. "NILS Working paper no 181. Modelling house prices across Sydney with estimates for access, property size, public transport, urban density and crime," NILS Working Papers 26086, National Institute of Labour Studies.
  3. Palm, Matthew & Gregor, Brian & Wang, Haizhong & McMullen, B. Starr, 2014. "The trade-offs between population density and households׳ transportation-housing costs," Transport Policy, Elsevier, vol. 36(C), pages 160-172.
  4. Judith Yates, 2011. "Housing in Australia in the 2000s: On the Agenda Too Late?," RBA Annual Conference Volume, in: Hugo Gerard & Jonathan Kearns (ed.), The Australian Economy in the 2000s Reserve Bank of Australia.
  5. Ryan Fox & Richard Finlay, 2012. "Dwelling Prices and Household Income," RBA Bulletin, Reserve Bank of Australia, pages 13-22, December.
  6. Arthur Grimes & Eyal Apatov & Larissa Lutchmann & Anna Robinson, 2014. "Infrastructure?s Long-Lived Impact on Urban Development: Theory and Empirics," ERSA conference papers ersa14p178, European Regional Science Association.
  7. Yanotti, Maria Belen, 2013. "A review of the Australian mortgage market," Working Papers 2014-01, University of Tasmania, Tasmanian School of Business and Economics, revised 01 Aug 2013.
  8. Xiangling Liu & Glenn Otto, 2014. "Housing Supply Elasticity in Sydney Local Government Areas," Discussion Papers 2014-13, School of Economics, The University of New South Wales.

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