Effects of land use regulations on housing prices

What is it about?

This paper reviews theoretical and empirical evidence on the effects of land use regulations on housing prices, and presents a taxonomy of these effects.

Featured Image

Why is it important?

The price effects of land use regulations have been debated for a long-time. Some authors argue that there are significant price-escalating effects; others argue that there are no price-escalating effects. Much of the debate is rooted in the philosophical beliefs of those engaging in the debate. And many existing studies have methodological flaws that undermine their findings. These debates are poised to become more numerous and significant in the near future for two reasons: a) in more developed countries, like the USA, UK and Australia, as the state and local governments enact more land use regulations to deal with climate change, concerns about the house price effects of those regulations will spur much discussion; and b) lesser developed countries, such as India, Indonesia and China, are in the midst of a large rural-to-urban migration that will prompt implementation of more land use regulations in their urban areas in the near future. Those new regulations will also generate much discussion. Using the taxonomy provided in this article as a guide, future researchers both in more developed and lesser developed countries can provide better assessments of the impacts of current and future land use regulations on house prices, and elevate the quality of all research and discussions on this topic.