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Urban Structure and Housing Prices: Some Evidence from Australian Cities

Author

Listed:
  • 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.

Suggested Citation

  • Mariano Kulish & Anthony Richards & Christian Gillitzer, 2011. "Urban Structure and Housing Prices: Some Evidence from Australian Cities," RBA Research Discussion Papers rdp2011-03, Reserve Bank of Australia.
  • Handle: RePEc:rba:rbardp:rdp2011-03
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    References listed on IDEAS

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    1. Alex Anas & Richard Arnott & Kenneth A. Small, 1998. "Urban Spatial Structure," Journal of Economic Literature, American Economic Association, pages 1426-1464.
    2. Alex Anas & Richard Arnott & Kenneth A. Small, 1998. "Urban Spatial Structure," Journal of Economic Literature, American Economic Association, pages 1426-1464.
    3. Aura, Saku & Davidoff, Thomas, 2008. "Supply constraints and housing prices," Economics Letters, Elsevier, vol. 99(2), pages 275-277, May.
    4. Richard K. Green & Stephen Malpezzi & Stephen K. Mayo, 2005. "Metropolitan-Specific Estimates of the Price Elasticity of Supply of Housing, and Their Sources," American Economic Review, American Economic Association, vol. 95(2), pages 334-339, May.
    5. David M. Cutler & Edward Glaeser, 2005. "What Explains Differences in Smoking, Drinking, and Other Health-Related Behaviors?," American Economic Review, American Economic Association, pages 238-242.
    6. 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 331-369, October.
    7. Dan Andrews & Aida Caldera Sánchez & Åsa Johansson, 2011. "Housing Markets and Structural Policies in OECD Countries," OECD Economics Department Working Papers 836, OECD Publishing.
    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. Paul Cheshire & Stephen Sheppard, 2004. "The Introduction of Price Signals into Land Use Planning," Urban/Regional 0410002, EconWPA.
    10. Cheshire, P. C. & Sheppard, Stephen Charles, 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.
    11. Edward L. Glaeser & Joseph Gyourko & Raven E. Saks, 2005. "Why Have Housing Prices Gone Up?," American Economic Review, American Economic Association, vol. 95(2), pages 329-333, May.
    12. Luci Ellis, 2006. "Housing and Housing Finance: The View from Australia and Beyond," RBA Research Discussion Papers rdp2006-12, Reserve Bank of Australia.
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    Citations

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    Cited by:

    1. Daniel M. Rees & Penelope Smith & Jamie Hall, 2016. "A Multi-sector Model of the Australian Economy," The Economic Record, The Economic Society of Australia, pages 374-408.
    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. Arthur Grimes & Eyal Apatov & Larissa Lutchman & Anna Robinson, 2014. "Infrastructure’s Long-Lived Impact on Urban Development: Theory and Empirics," Working Papers 14_11, Motu Economic and Public Policy Research.
    4. Palm, Matthew & Gregor, Brian & Wang, Haizhong & McMullen, B. Starr, 2014. "The trade-offs between population density and households׳ transportation-housing costs," Transport Policy, Elsevier, pages 160-172.
    5. 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.
    6. Ryan Greenaway-McGrevy & Arthur Grimes & Mark Holmes, 2016. "Two countries, sixteen cities, five thousand kilometres: How many housing markets?," ERSA conference papers ersa16p49, European Regional Science Association.
    7. 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.
    8. Ryan Fox & Richard Finlay, 2012. "Dwelling Prices and Household Income," RBA Bulletin, Reserve Bank of Australia, pages 13-22, December.
    9. 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.

    More about this item

    Keywords

    housing; housing prices; land prices; zoning; land use;

    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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