Author:Santiago Bucaram, Mario Andres Fernandez, Gonzalo E Sanchez
Source:New Zealand Association of Economists
Housing prices in Auckland, New Zealand, have persistently increased in the last decade, to fast-track development of housing, Special Housing Areas (SHA) were created in September 2013 and were supposedly a measure to mitigate Auckland’s housing crisis and improve affordability.
SHA resemble Inclusionary Zones initiatives implemented in the United States and Europe as most development projects had to provide at least 10 per cent affordable housing or at least target specified population groups. However, it is not clear the extent of the success (or failure) of SHA as they were disestablished by May 2017 and there is no empirical research on the subject.
This paper analyses the price effects of the establishment of SHA within a quasi-experimental approach. We used a dataset for more than 150 thousand sales transactions between 2011 and 2016 and applied a Difference-in-Difference (DiD) methodology. The results indicate that the creation of the SHA generated an average price increase of approximately 5%, and more generally that affordability did not improve, but rather worsen. These findings are robust to specifications that restrict the distance from the SHA, and to the inclusion of geographic and time fixed effects.
This paper contributes to the literature by identifying a causal relationship between the implementation of voluntary Inclusionary Zones and market outcomes.
Paper presented at the New Zealand Association of Economists Conference, Auckland, 27-29 June 2018