Reflections on the nature and policy implications of planning restrictions on housing supply. Discussion of ‘Planning policy, planning practice, and housing supply’ by Kate Barker
* London School of Economics, e-mail: p.cheshire{at}lse.ac.uk
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Planning is about other things as well, but it is fundamentally an economic activity. It allocates a scarce resource but independently of prices or any market information. In analysing the effects this allocative mechanism has on housing supply (or, indeed, the supply of buildings for any given use), we need to think carefully about what exactly it is that planning allocates and whether, in its operation, it creates a constraint on the supply of what it is allocating. In the British case, our planning system does not operate on the supply of housing directly, but indirectly via the constraint imposed on land supply. Given the income elasticity of demand for space this has policy implications perhaps even more serious than is acknowledged by Barker.
Key Words: land use regulation • demand for space • housing demand • housing affordability
1 There have been increasing signs of change in the Netherlands since about 2000, with growing pressure to constrain development and establish urban-containment policies.
2 The study of Glaeser and Gyourko (2003) was a form of hedonic. This found a positive price paid for gardens, but a negative price paid for additional garden space over the mean garden size.
3 1980, the date in Kate Barker's figure at which the house price = 100, was, in fact, a low point in the real house-price cycle, so perhaps the figure tends to overstate the trend increase since that date.
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