Incentivizing Residential Land Development

18 Pages Posted: 12 Dec 2018

See all articles by Graeme Guthrie

Graeme Guthrie

Victoria University of Wellington - School of Economics & Finance

Date Written: November 20, 2018


The owners of undeveloped urban land are often blamed for restricting housing supply and thereby driving up house prices in the face of increasing demand. This paper shows how greater intra-city variation in amenity values reduces competition between developers and makes delaying development more attractive to landowners. Competition can be enhanced, and development of land accelerated, by reducing this variation. In particular, governments can increase housing supply in more desirable areas by taking actions that boost the amenity value of land in less desirable areas.

Keywords: real estate, housing supply, urban development, land banking, real options

JEL Classification: D25, O18, R31, R38

Suggested Citation

Guthrie, Graeme, Incentivizing Residential Land Development (November 20, 2018). Available at SSRN: or

Graeme Guthrie (Contact Author)

Victoria University of Wellington - School of Economics & Finance ( email )

P.O. Box 600
Wellington 6140
New Zealand
64 4 463 5763 (Phone)

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