We explore the determinants of the speed of residential development after onset of dwelling construction. Using a sample of over 110,000 residential developments in England from 1996 to 2015 and employing an instrumental variable- and fixed effects-strategy, we find that positive local demand shocks reduce the construction duration in a location with average supply constraints and market power. However, this reduction is less pronounced in areas (i) where local planning is more restrictive, (ii) that are more built-up, and (iii) where competition in the local development sector is lower. We provide a model that rationalises these results. Our findings imply that the slow build out rate in England is the result of both market and policy failure.

The responsiveness of housing supply, measured as the price elasticity of housing supply, is a key factor in the regional housing market. Despite its importance, there is still a lack of understanding of the extent of variation in supply elasticity and its drivers. In this paper, we address these questions by examining the regional variation in long-run housing supply elasticity and its sources of variation in the context of Finland. We first estimate the housing supply elasticity in the 22 largest Finnish cities using time series data from 1988 to 2020. The estimated long-run supply elasticities substantially vary across cities. We then use these estimates to examine how the variation in local supply elasticity relates to different non-policy and policy factors. This study focuses especially on examining the role of different city-level land use policy interventions – including both land policy and planning interventions – in explaining differences in the housing supply elasticity across cities. Our findings suggest that a more restrictive land use policy, especially in terms of interventions that increase the indirect costs of the development process, decreases the supply elasticity.

How does a lack of affordable housing affect labor outcomes? We demonstrate that the exogenous loss of access to affordable homes leads low- and middle-income workers to commute further to work, reduces their hourly wages, and increases their working hours. Losing access to affordable housing also decreases the likelihood of being promoted. These effects are caused by workers who live far from their workplace after losing access to affordable homes. We rationalize our findings with a simple monocentric city model, which suggests that a shock in rent prices reduces equilibrium wages due to the negative impact of distance on productivity. Our paper highlights the significant impact of unaffordable housing prices on job outcomes for those unable to live close to work.