School of Economics

  Invites you to a

Macroeconomics and Trade seminar presented by

Isaac Gross
(Monash University)

Housing Supply and NIMBYism

Wednesday 25 October 2023

2:00pm – 3.30pm

Level 6 Seminar Room (650)

A02 Social Sciences Building
Camperdown Campus

The University of Sydney NSW 2006

 Zoom: 86043407397

We develop a political economy model of the housing market over the lifecycle in which the supply of new homes is determined democratically by households. In this environment support for additional housing is determined by the marginal impact it has on the households’ expected discounted utility. Households that own housing and would be made worse off by additional supply oppose new permits – the Not In My Backyard or NIMBY effect. Households that wish to buy a house and would benefit from additional housing support more supply. We find that support for additional supply is highest among households that are younger, low-income or are currently renting. We then simulate the impact of a temporary population boom in the model. We find that the “boom” generation have higher rates of homeownership and higher net worth due to their disproportionate voting power. However, this comes at the expense of higher house prices, lower homeownership rates and less wealth for the subsequent generation. Calibrating the model to US demographic data, we find this political economy mechanism was responsible for 10 percent of the rise in the house price to income ratio since 1950. Using demographic projections we forecast that the aging of the population will lead the house price to income to ratio to continue to rise in the 21st century.

For further information contact: Macroeconomics and Trade seminar series coordinator Dr James Graham (james.a.graham@sydney.edu.au)

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