The effect of public land development on housing supply

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Insinööritieteiden korkeakoulu | Master's thesis
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Master's Programme in Urban Studies and Planning
Public Land development (PLD) as a land development policy is used by the public for developing raw land. PLD is known for its efficiency in time and cost, as well as its financial benefits for the municipalities. PLD policy is a market intervention into the property market, and the same as any other policy, PLD has its potentials and risks. With the potentials and risks embedded in PLD, the outcome of this policy on the housing market is uncertain. The objective of this thesis is to investigate the effect of Public Land Development on housing supply in order to explore its impact on the housing market. In this thesis, the quantitative method is used to explore the relation of using PLD and housing supply elasticity. The sample consists of ten major Finnish cities and five cities that play the role of center of the region. Data used in this thesis consist of the years 1995 to 2017 for time-variant variables and cross-sectional data for the year 2018. Investigation of the objective of this thesis consists of two steps. In the first step, by using statistical modeling, the housing supply elasticity of sampled cities is estimated. In the second step, the relation between estimated housing supply elasticity and the PLD measure is evaluated. In both estimations Generalized Method of Moments is used as the estimation method. The results of the research indicate that there is not enough evidence to support the existence of a relationship between PLD and housing supply elasticity. Thus, this thesis suggests that using PLD aiming for affecting housing supply elasticity may not be rewarding. Suggestions are also included in this thesis for future research opportunities and improvement of the current study.
Falkenbach, Heidi
Thesis advisor
Valtonen, Eero
public, land, development, housing, supply, elasticity
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