Housing Supply: Green Belts

Abstract

Green belts are a planning device designed to contain urban growth. Green belts originated in England and were adopted by quite a few countries over time. Scotland, Canada, and Korea are examples. Some US cities have green belts or urban growth boundaries which are similar to green belts. Green belts affect the markets for residential land and housing in several ways. They reduce the supply of developable land, and hence lead to decreases in supply of new housing and then indirectly to increases in housing prices. Green belts can affect the location, timing, density, and the types of housing development. They also make housing supply less responsive to price and as a consequence housing prices are more volatile. There are not many empirical studies that specifically analyse the impact of green belts on housing supply, but those that have been completed do confirm theoretical predictions. Green belts have important implications for achieving housing supply targets, especially because they enjoy public support.