The Impact of Land Use Planning and Tax Subsidies on the Supply and Price of Housing in Britain

Abstract

This article presents new empirical estimates of the impact of two types of policy intervention, tax subsidies and land use planning, on the housing market in Britain. The estimates are derived from a set of models representing the demand and supply sides of the market for the new private housebuilding which include an explicit land supply element. The models are fitted to cross-sectional data at the inter-urban (local authority) level, and then employed in medium-period simulations of alternative policies. Modelling at this level enables estimates to be made of the extent of variation between local markets in the elasticity of supply and also in the impacts of policy measures, including the capitalisation of tax subsidies.