Forskningsseminar: Market rate housing construction in urban neighborhoods
- Stefan Leknes og Erlend Bøe
- 6. mai 2021
- 11:45 - 12:45
Stefan Leknes og Erlend Bøe: Market rate housing construction in urban neighborhoods
Abstract: How does the construction of new, market rate housing affect the immediate neighborhood? In general, new, market-price housing has higher standard than older housing, and should therefore attract wealthier residents. It is possible that positive neighborhood externalities could increase the prices of the neighboring housing stock. On the other hand, new housing increases local supply, and could lead to falling prices if local demand is limited. We use detailed housing data from Norway's capital Oslo to study how existing housing is affected by newbuilds in the neighborhood. Because housing construction is endogenous, we instrument new neighboring buildings with the share of available space around existing buildings. Preliminary analyses show that the effect on housing prices is negative, but small, suggesting that the supply effect is larger than any positive neighborhood effect. We also examine whether the buyer composition for existing housing is affected by the construction of neighboring new housing.