The Impact of Supply Constraints on House Prices in England
Institut d'Economia de Barcelonia
Download Document| Date Published | 2013 |
| Version | |
| Primary Author | Christian A. L. Hilber |
| Other Authors | Wouter Vermeulen |
| Theme | Real Estate Cycles and Bubbles |
| Country | United Kingdom |
Abstract
We explore the impact of different types of supply constraints on house prices in England by exploiting a unique panel dataset of 353 local planning authorities ranging from 1974 to 2008. Using exogenous variation from a policy reform, vote shares and historical density to identify the endogenous constraints-measures, we find that: i) Regulatory constraints have a substantive positive impact on the house price-earnings elasticity; ii) The effect of constraints due to scarcity of developable land is largely confined to highly urbanised areas; iii) Uneven topography has a quantitatively less meaningful impact; and iv) The effects of supply constraints are greater during boom than bust periods.