The Impact of Upzoning on Housing Construction in Auckland

There is a growing debate about whether upzoning is an effective policy response to housing shortages and unaffordable housing. This paper provides empirical evidence to further inform debate by examining the various impacts of recently implemented zoning reforms on housing construction in Auckland, the largest metropolitan area in New Zealand. In 2016, the city upzoned approximately three quarters of its inner suburban land to facilitate construction of more intensive housing. We use a quasi-experimental approach to analyze the short-run impacts of the reform on construction, allowing for potential shifts in construction from non-upzoned to upzoned areas (negative spillovers) that would, if unaccounted for, lead to an overestimation of treatment effects. We find strong evidence that upzoning stimulated construction. Treatment effects remain statistically significant even under implausibly large spillovers that would necessitate a six-fold increase in the trend rate of construction in control areas under the counterfactual of no-upzoning. Our findings support the argument that upzoning can stimulate housing supply and suggest that further work to identify factors that mediate the efficacy of upzoning in achieving wider objectives of the policy would assist policymakers in the design of zoning reforms in the future

Alternative Price Indexes for Medical Care: Evidence from the MEPS Survey

Spending on medical care is a large and growing component of GDP. There are wellknown measurement problems that are estimated to overstate inflation and understate real growth for this sector by as much as 1-1/2 percentage points per year. Because of its size, this would translate into an overstatement of inflation for the overall economy of about ¼ percentage point with an equal understatement in real GDP growth. In this paper, we use data from the Medical Expenditure Panel Survey to obtain new, more comprehensive estimates for this bias and to explore a possible adjustment to existing official price indexes. The MEPS data show an upward bias to price growth in this sector of 1 percentage point, which translates into an overstatement of overall inflation of .2 percentage point and an understatement of GDP growth of the same amount. We also find that an adjustment recently used in Bradley et al provides a useful approximation to the indexes advocated by health economists.

Hot Property in New Zealand: Empirical Evidence of Housing Bubbles in the Metropolitan

Using recently developed statistical methods for testing and dating exhuberant behavior in asset prices we document evidence of episodic bubbles in the New Zealand property market over the past two decades. The results show clear evidence of a broad-based New Zealand housing bubble that began in 2003 and collapsed over mid 2007 to early 2008 with the onset of the worldwide recession and the financial crisis. New methods of analyzing market contagion are also developed and are used to examine spillovers from the Auckland property market to the other metropolitan centres. Evidence from the latest data reveals that the greater Auckland metropolitan area is currently experiencing a new property bubble that began in 2013. But there is no evidence yet of any contagion effect of this bubble on the other centres, in contrast to the earlier bubble over 2003-2008 for which there is evidence of transmission of the housing bubble from Auckland to the other centres. One of our primary conclusions is that the expensive nature of New Zealand real estate relative to potential earnings in rents is partly due to the sustained market exuberance that produced the broad based bubble in house prices during the last decade and that has continued through the most recent bubble experienced in the Auckland region since 2013

Hot property in New Zealand: Empirical evidence of housing bubbles in the metropolitan centres

Using recently developed statistical methods for testing and dating exuberant behaviour in asset prices we document evidence of episodic bubbles in the New Zealand property market over the past two decades. The results show clear evidence of a broad-based New Zealand housing bubble that began in 2003 and collapsed over mid-2007 to early 2008 with the onset of the worldwide recession and the financial crisis. New methods of analysing market contagion are also developed and are used to examine spillovers from the Auckland property market to the other metropolitan centres. Evidence from the latest data reveals that the greater Auckland metropolitan area is currently experiencing a new property bubble that began in 2013. But there is no evidence yet of any contagion effect of this bubble on the other centres, in contrast to the earlier bubble over 2003–2008 for which there is evidence of transmission of the housing bubble from Auckland to the other centres. One of our primary conclusions is that the expensive nature of New Zealand real estate relative to potential earnings in rents is partly due to the sustained market exuberance that produced the broad-based bubble in house prices during the last decade and that has continued through the most recent bubble experienced in the Auckland region since 2013.</p

The impact of upzoning on housing construction in Auckland∗

In 2016 the city of Auckland in New Zealand upzoned approximately three quarters of itscore suburban area to promote and facilitate construction of more intensive housing. We use aquasi-experimental approach to analyze the impact of upzoning on house construction over thefour years subsequent to the policy change. Our analysis permits potential shifts in constructionfrom non-upzoned to upzoned areas (negative spillovers) that would, if unaccounted for, leadto an overestimation of treatment effects. These spillovers are accommodated through a partialidentification approach to the estimation of treatment effects that extrapolates pre-treatmenttrends in the control group of non-upzoned areas to define a set of counterfactual outcomes. Thecounterfactual set permits local departures from linearity to permit nonlinear trends. We findthat treatment effects remain statistically significant even under implausibly large counterfactualsets that include seven times the consents implied by the extrapolated pre-treatment trend. Toproduce a spillover-robust estimate of the additional construction enabled by the policy, wecollapse the counterfactual set to the extrapolated trend, finding that the policy generated anadditional 26,903 consents by 2021. This corresponds to 5.07% of the city’s dwelling stock, andeffectively doubles the rate of housing construction immediately prior to the policy change. Asof 2021, construction of attached dwellings was trending upwards in upzoned areas, indicatingthat the long-term impacts of the policy are yet to be realized