Does affordable housing make cities more competitive?

Erasmus, Remert (2021-12)

Thesis (MCom)--Stellenbosch University, 2021.

Thesis

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.

AFRIKAANSE OPSOMMING : Hierdie studie werp lig op die gevolge van onbekostigbare huispryse en hoe dit die groeivooruitsigte van stede negatief beïnvloed. Dit word gedoen deur te kyk na hoe aanwysers van ekonomiese uitbreiding in 'n stad, soos inkomstegroei en bevolkingsgroei, beïnvloed word deur toenames in bekostigbaarheidsverhoudings vir behuising. Hierdie studie maak gebruik van 'n nuwe huisprys-teenoor-vervangingskosteverhouding wat dui op hoë huispryse as gevolg van ‘n gebrek aan aanbod. Deur te bestudeer hoe toenames in hierdie verhouding die bevolking en inkomstegroei in stede beïnvloed, kan meer lig gewerp word op die ekonomiese koste verbonde aan beperkende soneringswette. Die model gebruik 'n geriefs-geografiese-ekwilibriumsmodel as vertrekpunt en die empiriese resultate dui aan dat 'n toename van 10% in die huisprys-teenoor-vervangingskosteverhouding gepaard gaan met 'n afname van 14% in die bevolkingsgroeikoers en 'n afname van 47% in die inkomstegroeikoers oor ‘n 5 jaar periode as die kapitaalgroei van stygende huispryse in ag geneem word.

Please refer to this item in SUNScholar by using the following persistent URL: http://hdl.handle.net/10019.1/123983
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