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Journal article

The Impact of Supply Constraints on House Prices in England

We test the theoretical prediction that house prices respond more strongly to changes in local earnings in places with tight supply constraints using a unique panel dataset of 353 Local Planning Authorities in England between 1974 and 2008. Exploiting exogenous variation from a policy reform, vote shares and historical density to identify the endogenous constraints-measures, we find that: regulatory constraints have a substantive positive impact on the house price-earnings elasticity; the effect of constraints due to scarcity of developable land is largely confined to highly urbanised areas; and uneven topography has a quantitatively less meaningful impact.

Christian A. L. Hilber and Wouter Vermeulen

1 March 2016

The Economic Journal 126(591) 2016

DOI: 10.1111/ecoj.12213

This Journal article is published under the centre's Urban programme.

This publication comes under the following theme: Urban inequality: The role of urban amenities, housing, infrastructure