Does Smart Growth Raise Housing Prices?

A new report suggests that stringent land use regulations result in increased housing prices.

1 minute read

December 5, 2005, 9:00 AM PST

By Chris Steins @planetizen


"A new report by the Organization for Economic Cooperation and Development (OECD) provides further evidence that stringent land use regulations (often called "smart growth") inordinately raise the price of houses.

The report is a Chapter in the latest issue of OECD Economic Outlook Number 78 , "Recent House Price Developments: the Role of Fundamentals." The OECD notes that

"House prices can also be affected by other features that are particular to this market. Of note are restrictions on the availability of land for residential housing development that can constrain the responsiveness of supply. These would include tough zoning rules, cumbersome building regulations, slow administrative procedures, all of which would restrict the amount of developable land." (page 210).

The OECD findings are consistent with the housing affordability multiples reported in the first annual Demographia International Housing Affordability Ratings and Rankings, which noted particular housing affordability problems in Australia, New Zealand and some US markets (principally California, the Northeast, Oregon and Colorado).

[PDF, 350KB, 42 pages]

Thanks to Wendell Cox

Sunday, December 4, 2005 in Organization for Economic Cooperation and Development

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