Land Hoarding and Urban Development

Graeme Guthrie ()
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Graeme Guthrie: Victoria University of Wellington

The Journal of Real Estate Finance and Economics, 2023, vol. 67, issue 4, No 8, 753-793

Abstract: Abstract This paper presents a model of a housing market with a fixed supply of land available for future development. Building density and the rate of land development are both endogenous. Competition amongst atomistic landowners leads to welfare-maximizing development policies. However, a monopolist landowner develops land faster, with lower building density, than a welfare-maximizing social planner. Unless demand is very high, the first effect dominates, because a monopolist landowner increases the size of the housing stock faster than a social planner. Rapid, low-density development is a commitment device. It boosts the monopolist’s development proceeds by making it more difficult to flood the market with new housing in the future.

Keywords: Housing supply; Land hoarding; Real estate; D25; O18; R31; R38 (search for similar items in EconPapers)
Date: 2023
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DOI: 10.1007/s11146-021-09880-y

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