When bubble meets bubble : contagion in OECD countries

Gómez-González, José Eduardo; Gamboa-Arbelaez, Juliana; Hirs-Garzón, Jorge; Pinchao-Rosero, Andrés D.

doi:10.32468/be.942

Cited by 16 publications

(19 citation statements)

References 22 publications

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“…The New South Wales government has adopted this view of planning policy noting that "[n]ew tools for rezoning will... unblock housing and employment supply" (NSW Government, 2013), while the Australian government established a National Housing Supply Council (NHSC) in 2008 to focus on "planning and development approval arrangements" to solve a "deficiency in supply [that] has contributed to rising house prices" NHSC (2013). But such policies never seem able to stop rapid home price growth, even in cities and countries widely claimed to have supply-friendly planning regulations (Costello & Rowley, 2010;Gurran & Phibbs, 2013;Gomez-Gonzalez et al , 2018). For example, Houston, Texas, is widely known for its unrestrictive zoning and responsive supply yet home prices increased 49% from 2012 to 2018 (U.S. Federal Housing Finance Agency, 2019).…”

Section: Introductionmentioning

confidence: 99%

Time Is Money: How Landbanking Constrains Housing Supply

Murray

2019

SSRN Journal

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Many housing policies aim to increase supply and reduce prices through rezoning, relying on the assumption that increasing allowable densities automatically accelerates the rate of housing supply. However, the existence of landbanking (land hoarding), where land able to be profitably developed for housing is withheld from the market in anticipation of future gains, undermines the logic of such policy changes.We expose major limits of the static housing supply model behind these policies by looking at the degree to which landbanking behaviour is consistent with model predictions.To do this, we assemble a new dataset of home sales and landbanks from the annual reports of Australia's top eight publicly-listed residential developers from 2001 to 2018 and use complete state-level planning approvals and lot production data in Queensland, Australia.In contrast to the static model prediction that landbanks serve the function of inventories, and are hence minimised, we find that (1) over 200,000 housing lots, or 13 years of new supply, are held by the eight largest housing development companies, and eight years of these landbanks are held in housing subdivisions that are approved and already for sale, that (2) the amount of zoned supply in a region is unrelated to the rate of new housing supply, and that (3) housing developers routinely delay housing production to capitalise on market cycles. Dynamic incentives to maximise total returns, including capital gains in the option value of undeveloped land, could be related to observed behaviour.

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Section: Introductionmentioning

confidence: 99%

Time Is Money: How Landbanking Constrains Housing Supply

Murray

2019

SSRN Journal

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“…We collect quarterly data on all the included variables. Given that our emphasis is not in detecting housing bubbles but rather in finding the determinants of their duration, we take as given those bubbles encountered by Pavlidis et al () and Gomez‐Gonzalez et al () for a set of OECD countries. Both follow the recently developed bubble detection method of Phillips and Yu () and Phillips, Shi, and Yu ().…”

Section: Methods and Datamentioning

confidence: 99%

“…Papers studying housing bubble formation have shown that there is vast heterogeneity in their duration (Gomez‐Gonzalez, Gamboa‐Arbeláez, Hirs‐Garzón, & Pinchao‐Rosero, ; Pavlidis et al, ). Importantly, they show that bubbles occurring around the recent international financial crisis lasted significantly longer than did those that originated in the 1980s and 1990s.…”

Section: Introductionmentioning

confidence: 99%

Determinants of housing bubbles' duration in OECD countries

Amador-Torres

Gómez-González

Sanín-Restrepo

2018

International Finance

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We study the determinants of housing price bubbles' duration for a set of OECD countries between 1970 and 2015. Our topic of study is of major importance, as duration is a proxy for other dimensions, such as the magnitude of bubbles, the extent of macroeconomic imbalances, and the chance that a rational bubble turns into an irrational one. We answer two related questions: (i) Does prolonged domestic monetary‐policy easing increase the duration of housing price bubbles? (ii) Does prolonged monetary‐policy easing in the United States influence the housing bubbles' duration in other OECD countries? We show that the answer to the first question is a clear yes but that the answer to the second question is not as clear. Our main result is that monetary‐policy tightening can accelerate the termination of a housing bubble. In this sense, our findings provide support for ‘leaning against the wind’ policies.

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“…But such policies never seem able to stop rapid home price growth, even in cities and countries widely claimed to have supply-friendly planning regulations (Costello & Rowley, 2010;Gurran & Phibbs, 2013;Gomez-Gonzalez et al , 2018). For example, Houston, Texas, is widely known for its unrestrictive zoning and responsive supply yet home prices increased 49% from 2012 to 2018 (U.S. Federal Housing Finance Agency, 2019).…”

Section: Introductionmentioning

confidence: 99%

Time is money: How landbanking constrains housing supply

Murray

2020

Journal of Housing Economics

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Many housing policies aim to increase supply and reduce prices through rezoning, relying on the assumption that increasing allowable densities automatically accelerates the rate of housing supply. However, the existence of landbanking (land hoarding), where land able to be profitably developed for housing is withheld from the market in anticipation of future gains, undermines the logic of such policy changes. We expose major limits of the static housing supply model behind these policies by looking at the degree to which landbanking behaviour is consistent with model predictions. To do this, we assemble a new dataset of home sales and landbanks from the annual reports of Australia's top eight publicly-listed residential developers from 2001 to 2018 and use complete state-level planning approvals and lot production data in Queensland, Australia. In contrast to the static model prediction that landbanks serve the function of inventories, and are hence minimised, we find that (1) over 200,000 housing lots, or 13 years of new supply, are held by the eight largest housing development companies, and eight years of these landbanks are held in housing subdivisions that are approved and already for sale, that (2) the amount of zoned supply in a region is unrelated to the rate of new housing supply, and that (3) housing developers routinely delay housing production to capitalise on market cycles. Dynamic incentives to maximise total returns, including capital gains in the option value of undeveloped land, could be related to observed behaviour.

show abstract

When bubble meets bubble : contagion in OECD countries

Cited by 16 publications

References 22 publications

Time Is Money: How Landbanking Constrains Housing Supply

Time Is Money: How Landbanking Constrains Housing Supply

Determinants of housing bubbles' duration in OECD countries

Time is money: How landbanking constrains housing supply

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