Supply Elasticity Estimates for the Sydney Housing Market

15 Pages Posted: 3 Jun 2012

See all articles by Emily Gitelman

Emily Gitelman

affiliation not provided to SSRN

Glenn Otto

UNSW Australia Business School, School of Economics

Date Written: June 2012

Abstract

This article presents estimates of the supply elasticity for residential property in metropolitan Sydney over the period 1991–2006. Our results suggest that supply is inelastic - less than unity - for all types of housing, although the supply elasticity is relatively larger for strata properties (apartments and flats) than for non‐strata properties (separate and semi‐detached houses, terraces and townhouses). We also find evidence of a significant fall in supply elasticity between 1991–1996 and 2001–2006. When the median time taken by a local council to decide on a development application is included in the supply curve, it is found to have a negative effect on the supply of residential property. However, split‐sample estimates indicate this effect is largely confined to the 1991–1996 period.

Suggested Citation

Gitelman, Emily and Otto, Glenn, Supply Elasticity Estimates for the Sydney Housing Market (June 2012). Australian Economic Review, Vol. 45, Issue 2, pp. 176-190, 2012. Available at SSRN: https://ssrn.com/abstract=2073087 or http://dx.doi.org/10.1111/j.1467-8462.2012.00679.x

Emily Gitelman (Contact Author)

affiliation not provided to SSRN

Glenn Otto

UNSW Australia Business School, School of Economics ( email )

High Street
Sydney, NSW 2052
Australia

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