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

Michael Ball, Paul Cheshire, Christian Hilber and Xiaolun Yu

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

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)
JEL-codes: D43 G28 R21 R31 R38 R52 (search for similar items in EconPapers)
Pages: 62 pages
Date: 2024-04-15
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http://eprints.lse.ac.uk/126820/ Open access version. (application/pdf)

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Working Paper: Why delay? Understanding the construction lag, aka the build out rate (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:126820

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