The Impact of Supply Constraints on House Prices in England

Institut d'Economia de Barcelonia

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Date Published 2013
Primary Author Christian A. L. Hilber
Other Authors Wouter Vermeulen
Theme Real Estate Cycles and Bubbles
Country United Kingdom


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.

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