Why delay? Understanding the construction lag, aka the build out rate

Michael Ball, Paul Cheshire, Christian Hilber and Xiaolun Yu

CEP Discussion Papers from Centre for Economic Performance, LSE

Abstract: We explore the determinants of the speed of residential development after dwelling construction starts. Using a sample of over 140,000 residential developments in England from 1996 to 2015 and employing an instrumental variable- and fixed effects-strategy, we find that positive local demand shocks reduce the construction duration in a location with average supply constraints and developer local market power. However, this reduction is less pronounced in areas (i) where local planning is more restrictive, (ii) that are more built-up, and (iii) where competition in the local development sector is lower. We provide a model that rationalises these results. Our findings imply that the slow build out rate in England is the consequence of both market and policy failures.

Keywords: construction lag; land use regulation; market power; housing supply; housing demand; housing market dynamics (search for similar items in EconPapers)
Date: 2024-04-15
New Economics Papers: this item is included in nep-ure
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Working Paper: Why delay? Understanding the construction lag, aka the build out rate (2024)
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