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The impact of supply constraints on house prices in England

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  • Hilber, Christian A. L.
  • Vermeulen, Wouter

Abstract

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.

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  • Hilber, Christian A. L. & Vermeulen, Wouter, 2016. "The impact of supply constraints on house prices in England," LSE Research Online Documents on Economics 58017, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:58017
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    File URL: http://eprints.lse.ac.uk/58017/
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    More about this item

    Keywords

    house prices; housing supply; supply constraints; land use regulation;
    All these keywords.

    JEL classification:

    • N0 - Economic History - - General

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