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House prices, housing development costs, and the supply of new single-family housing in German counties and cities

  • Lerbs, Oliver W.
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    This paper employs panel data on 413 German counties and cities from 2004 to 2009 to investigate the supply of new single-family housing in local housing markets. New local housing supply is measured by the annual number of construction permits in relation to the existing single-family housing stock. This supply indicator is econometrically related to existing home prices and new housing development costs, which include the costs of housing construction and vacant land in a given location. The results suggest that both higher prices for existing homes and recent increases in development costs are positively associated with local single-family home permit rates. Instead, higher levels of development costs turn out to dampen construction activity. The average local price elasticity of new single-family home supply is considerably less than one, with surprising differences across the urban hierarchy.

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    File URL: http://econstor.eu/bitstream/10419/57924/1/715315455.pdf
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    Paper provided by Center of Applied Economic Research Münster (CAWM), University of Münster in its series CAWM Discussion Papers with number 57.

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    Date of creation: 2012
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    Handle: RePEc:zbw:cawmdp:57
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