Browsing by Author "Erasmus, Remert"
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- ItemDoes affordable housing make cities more competitive?(Stellenbosch : Stellenbosch University, 2021-12) Erasmus, Remert; Van Lill, Dawid, 1957-; Stellenbosch University. Faculty of Economic and Management Sciences. Dept. of Economics.ENGLISH SUMMARY : This study sheds light on the consequences of unaffordable house prices and how they negatively affect cities' growth prospects. This is done by studying how economic expansion indicators in a city such as income growth and population growth are affected by increases in housing affordability ratios. This study uses a novel incorporation of the house price to replacement cost ratio that indicates high house prices due to lack of supply. By studying how increases in this ratio affect cities' population and income growth, one can observe the economic costs of restrictive zoning laws. The model uses an amenities spatial equilibrium model as a point of departure and the empirical results indicate that a 10% increase in the house price to replacement cost ratio is associated with a 14% decrease in the population growth rate and a 47% decrease in the income growth rate over 5 years when controlling for the capital gain from rising house prices.