Zoning ordinances and the housing market in developing countries: Evidence from Brazilian municipalities

Ricardo Andrade Lima and Raul Silveira Neto ()

Journal of Housing Economics, 2019, vol. 46, issue C

Abstract: Due to recent urbanization and the increased population density around major Brazilian cities, the real estate market in the country has appreciated greatly. In addition to demand-related factors, mechanisms with the potential to limit the housing supply may have also affected the price increase in that market. The objective of this study is to investigate the impact of zoning ordinances (land-use regulations) on the average rental prices and the growth in the number of dwellings in Brazil. Through an intercity analysis and using identification methods that rely both on selection on observable and unobservable covariates, the set of evidence indicates that zoning ordinance is associated with an increment ranging from 5.3% to 6% in average rents, but does not affect the dwellings growth. Sensitivity analysis suggests that these results are not simply driven by unobservable confounders. Our evidence, thus, indicates that even being a usually well-intentioned policy, zoning ordinances tend to generate social costs that need to be taken into account in the analysis of the real-estate market in Brazil.

Keywords: Land use restrictions; Urban zoning; Urban development; Public policy (search for similar items in EconPapers)
JEL-codes: L51 R31 R52 (search for similar items in EconPapers)
Date: 2019
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jhouse:v:46:y:2019:i:c:s1051137718302080

DOI: 10.1016/j.jhe.2019.101653

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