Policy and Professional Development in the Pub: The impact of land supply on detached residential property prices in Melbourne
From: Tuesday March 24, 2020, 5:30 pm
To: Tuesday March 24, 2020, 6:30 pm
Given the exceptional circumstances surrounding COVID-19, the Victorian Branch of the Economic Society of Australia has cancelled this event. The Branch is exploring ways to engage members and deliver relevant content that does not involve face-to-face contact, such as through podcasts or webinars. This is includes the research that was to be showcased in this event.
Thank you for your understanding in this very fluid situation.
The impact of land supply on detached residential property prices in Melbourne
This presentation builds on the literature attempting to establish the relationship between land use regulation and property price growth. Using a newly constructed dataset that matches property transactions to planning permit applications at the statistical area 2 (SA2) level in Greater Melbourne, the effect of land supply restrictiveness is estimated directly. The modelling approach adopted also accounts for issues of endogeneity.
The results suggest changes in land supply impact property prices differently in the inner-city area relative to the outer regions of Melbourne, likely due to the role of densification. Densification appears to have spillover effects, putting upward pressure on the price of remaining residential detached land within a 21 km radius of the city. Without allowing for further densification in this inner ring, supply restrictiveness can almost double the price of detached residential land in certain local government areas, such as the City of Melbourne and City of Yarra. These results indicate that the paper by Kendall and Tulip (2018) from the Reserve Bank of Australia may significantly underestimate the impact of supply restrictions on price in some areas.
The research on which this presentation is based forms part of an Australian Research Council Linkage Grant between The University of Queensland and the Department of Treasury and Finance, Victoria. Please see Volume 4 of Victoria's Economic Bulletin for more details on this research.
About the speakers
Professor Alicia Rambaldi joined the School of Economics at The University of Queensland in 2001. Her research focuses on developing new econometric modelling frameworks, such as state-space models that account for cross-sectional dependence and time-varying parameter models, and using them in a range of economic applications. Recent applications have included land and property valuation, house prices, climate change adaptation, transport demand, international comparisons of economic performance and the measurement of sectoral productivity growth.
Dr Madeleine Tan is a Senior Economist in the Revenue Group of the Department of Treasury and Finance, Victoria. While at DTF, she has provided advice to the State Government related to revenue forecasts, the revenue impacts of taxation policy options and the Victorian property market. Before joining DTF in 2016, Madeleine was awarded a PhD in Economics from the University of Melbourne, where her research focused on empirical macroeconomics techniques applied to the Australian and East Asian economies.
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14-30 Melbourne Place, Melbourne VIC 3000