Author
Bahadır, Berrak, Mykhaylova, O.
Publication Date
2014-12
Publication Place
-
Elsevier
Subject
House prices, Building permits, Construction delays, Supply shocks
Type
Periodical
Language
English
Digital
Yes
Manuscript
No
Library
Özyeğin University
Library Asset ID
1051-1377
Record ID
15565d64-6326-4a48-bac6-cf8fd204462b
Library Location
Economics
Date
2014-12
Sample Text
Housing supply is subject to several types of delays. On average, it takes 6 months to get approved for a residential building permit and another 2–4 quarters to complete a construction project. We present a simple two-sector model that incorporates these observations and show that the effect of these delays is not uniform: while they amplify the response of house prices to demand shocks, they dampen the effects of housing supply shocks. Moreover, construction activity depends on the relative duration of the shocks and the construction delays: delays dampen construction booms following temporary shocks, but exaggerate building activity following permanent changes in demand or supply conditions. Our results highlight the importance of capturing the nature and the persistence of the shocks when studying the effects of construction sector delays on housing market dynamics.
DOI
10.1016/j.jhe.2014.09.005
Cilt
26
