City-wide Effects of New Housing Supply: Evidence from Moving Chains

VATT Institute for Economic Research Working Papers 146

24 Pages Posted: 24 Sep 2021

See all articles by Cristina Bratu

Cristina Bratu

VATT Institute for Economic Research

Oskari Harjunen

VATT Institute for Economic Research

Tuukka Saarimaa

Aalto University - School of Business; Aalto University - School of Engineering

Date Written: August 31, 2021

Abstract

We study the city-wide effects of new, centrally-located market-rate supply using geo-coded total population register data from the Helsinki Metropolitan Area. The supply of new market rate units triggers moving chains that quickly reach middle- and low-income neighborhoods and individuals. Thus, new market-rate construction loosens the housing market in middle- and low-income areas even in the short run. Market-rate supply is likely to improve affordability outside the sub-markets where new construction occurs and to benefit low-income people.

Keywords: Housing supply, Housing affordability, Filtering

JEL Classification: R31, R21, R23

Suggested Citation

Bratu, Cristina and Harjunen, Oskari and Saarimaa, Tuukka, City-wide Effects of New Housing Supply: Evidence from Moving Chains (August 31, 2021). VATT Institute for Economic Research Working Papers 146, Available at SSRN: https://ssrn.com/abstract=3929243 or http://dx.doi.org/10.2139/ssrn.3929243

Cristina Bratu

VATT Institute for Economic Research ( email )

Oskari Harjunen

VATT Institute for Economic Research ( email )

Tuukka Saarimaa (Contact Author)

Aalto University - School of Business ( email )

P.O. Box 21210
AALTO, FI-00076
Finland

Aalto University - School of Engineering ( email )

PO BOX 14100
Aalto 00076
Finland

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