Housing Supply Elasticity in Sydney Local Government Areas

Xiangling Liu (xiang.liu@unsw.edu.au) and Glenn Otto (g.otto@unsw.edu.au)
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Xiangling Liu: School of Economics, Australian School of Business, the University of New South Wales
Glenn Otto: School of Economics, Australian School of Business, the University of New South Wales

No 2014-13, Discussion Papers from School of Economics, The University of New South Wales

Abstract: We report supply elasticity estimates of residential property (houses and apartments) for Local Government Areas (LGAs) in metropolitan Sydney. Using annual data for 1991-2012, the average supply elasticity estimate across all LGAs is 0.2 for houses and 0.8 for apartments. The supply ofhouses is inelastic in all 43 LGAs; in contrast apartment supply is elastic – greater than unity – in about one-third of LGAs. We develop a model to explain the cross-section variation in supply elasticity across LGAs. For houses, supply elasticity is negatively related to an LGA’s population density, the time taken by a Local Council to process a development application and to various measures of the amount of land in an LGA that is unavailable for new housing development. Variation in supply elasticity for apartments across LGAs is unrelated to any of the available regressors.

Keywords: housing supply; supply elasticity; development application; undevelopable land (search for similar items in EconPapers)
JEL-codes: R31 R52 (search for similar items in EconPapers)
Pages: 31 pages
Date: 2014-03
New Economics Papers: this item is included in nep-ger and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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