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Cities are judged to be successful according to their ability to attract firms and people, stimulate productivity and provide desirable amenities. A consequence of the demand for space in successful cities, however, is that constraints on the supply of housing - usually the consequence of planning policy rather than physical constraints - lead to rapidly rising prices and high volatility, with associated problems of affordability for low-income, low-skill households. In contrast, the durability of housing potentially leads to rapidly falling house prices in declining cities, which, in turn, attract lower income households and lead to the formation of poverty traps. The chief aim of this programme is, therefore, to analyse the effects and constraints introduced by housing and other spatial policies both across and within cities and to bring state-of-the-art programme evaluation methods to investigate these issues.

Part of this research looks at the role of these housing supply constraints on residential mobility and sorting across cities. Using house prices and local authority planning data, SERC researchers are exploring the adjustment processes in the labour market and the barriers to labour mobility implied by housing durability and land use restrictions. Related research efforts entail the estimation of the effects of planning on retail productivity by models of spatial competition.

A second part of the programme examines the constraints introduced by other types of housing policy, with a specific focus on housing benefits. Linking micro-data to geo-referenced data on rents and benefit levels, we aim to assess whether the recent caps on housing benefits and under-occupancy rules (the so-called 'Bedroom Tax') have resulted in lower rents, down-sizing or migration of social tenants out of high-price areas. Such outcomes would be highly informative for policy since out-migration of low-income households, for instance, would drive these groups away from better labour market opportunities and better schooling - further exacerbating existing inequalities.

Related Publications

Housing Allowance and Rents: Evidence from a Stepwise Subsidy Scheme
Essi Eerola and Teemu Lyytikäinen
August 2017 | Paper No' SERCDP0220

Social Tenants' Health: Evaluating the Effectiveness of Landlord Interventions
Paul Cheshire, Stephen Gibbons and Jemma Mouland
August 2017 | Paper No' SERCDP0219

Transfer Taxes and Household Mobility: Distortion on the Housing or Labor Market?Christian A. L. Hilber and Teemu Lyytikäinen
June 2017 | Paper No' SERCDP0216

Fear of Fracking? The Impact of the Shale Gas Exploration on House Prices in Britain
Steve Gibbons, Stephan Heblich, Esther Lho and Christopher Timmins
October 2016 | Paper No' SERCDP0207

The Stimulative Effect of an Unconditional Block Grant on the Decentralized Provision of Care
Mark Kattenberg and Wouter Vermeulen
November 2016 | Paper No' SERCDP0209:

The Housing Market Impacts of Constraining Second Home Investments
Christian A. L. Hilber and Olivier Schöni
August 2016 | Paper No' SERCDP0204

The Preservation of Historic Districts - Is it Worth it?
Sevrin Waights
July 2016 | Paper No' SERCDP0202

Transfer Taxes and Household Mobility: Distortion on the Housing or Labor Market?
Christian A. L. Hilber and Teemu Lyytikäinen
October 2015 | Paper No' SERCDP0187

Credit Constraints and the Composition of Housing Sales. Farewell to First-Time Buyers?
Felipe Carozzi
July 2015 | Paper No' SERCDP0183

Regulating Housing Vacancies Away? The Paradoxical Effects of Mismatch
Paul Cheshire, Christian A. L. Hilber and Hans R. A. Koster
July 2015 | Paper No' SERCDP0181