EconPapers    
Economics at your fingertips  
 

Does issuing building permits reduce the cost of land? An estimation based on the demand for building land in France

Jean-Sauveur Ay (), Jean Cavailhès, Mohamed Hilal and Julie Le Gallo ()

Economie et Statistique / Economics and Statistics, 2018, issue 500-501-502, 45-67

Abstract: [eng] While the aggregate value of constructed land rose from 45% to nearly 260% of gross domestic product in France between 1998 and 2006, stabilising after the crisis, regulatory constraints on construction are used to explain the rise in land prices, which are weighing on production costs for new housing units. Here we analyse to what extent the issuance of building permits reduces the price of land. We first propose a theoretical assignment model of heterogeneous households (in terms of preferences) to heterogeneous building plots (in terms of location) to study the effects of construction on the price of land. We then estimate the inverse demand for building land by instrumenting construction (quantity) by instrumental variables relating to the nature of the land, to its topography, to the agricultural opportunity cost and to the presence of industrial brownfields. A 1% increase in the number of permits issued resulted in a moderate decrease in land prices of 0.3%, on average. The effect, which differs according to the type of construction, increases with proximity to dense zones.

JEL-codes: R14 R31 R52 (search for similar items in EconPapers)
Date: 2018
References: Add references at CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
https://insee.fr/en/statistiques/fichier/3621981/5 ... o_Cavailhes%20EN.pdf (application/pdf)

Related works:
Working Paper: Does issuing building permits reduce the cost of land? An estimation based on the demand for building land in France (2018)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nse:ecosta:ecostat_2018_500-501-502_4

DOI: 10.24187/ecostat.2018.500t.1945

Access Statistics for this article

Economie et Statistique / Economics and Statistics is currently edited by Sophie Ponthieux

More articles in Economie et Statistique / Economics and Statistics from Institut National de la Statistique et des Études Économiques (INSEE) Contact information at EDIRC.
Bibliographic data for series maintained by Etienne de Latude ().

 
Page updated 2021-08-03
Handle: RePEc:nse:ecosta:ecostat_2018_500-501-502_4