House prices, housing development costs, and the supply of new single-family housing in German counties and cities

Oliver W. Lerbs

No 57, CAWM Discussion Papers from University of Münster, Münster Center for Economic Policy (MEP)

Abstract: This paper employs panel data on 413 German counties and cities from 2004 to 2009 to investigate the supply of new single-family housing in local housing markets. New local housing supply is measured by the annual number of construction permits in relation to the existing single-family housing stock. This supply indicator is econometrically related to existing home prices and new housing development costs, which include the costs of housing construction and vacant land in a given location. The results suggest that both higher prices for existing homes and recent increases in development costs are positively associated with local single-family home permit rates. Instead, higher levels of development costs turn out to dampen construction activity. The average local price elasticity of new single-family home supply is considerably less than one, with surprising differences across the urban hierarchy.

Keywords: new housing supply; local housing markets; panel data (search for similar items in EconPapers)
JEL-codes: C31 R12 R31 (search for similar items in EconPapers)
Date: 2012
New Economics Papers: this item is included in nep-geo and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:cawmdp:57

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