Spatial Determinants of Land Prices: Does Auckland’s Metropolitan Urban Limit Have an Effect?

Abstract

Land prices within monocentric cities typically decline from the centre to the urban periphery. More complex patterns are observed in polycentric and coastal cities; discrete jumps in value can occur across zoning boundaries. Auckland (New Zealand) is a polycentric, coastal city with clear-cut zoning boundaries. Information on land price patterns within the city is important to understand the nature of development and the effects of regulation in causing discrete land valuation changes. One key zoning regulation in Auckland is a growth boundary, termed the metropolitan urban limit (MUL). We examine whether the existence of this growth limit affects land prices. We do so in the context of a model of all Auckland land values over a twelve year period, finding a strong zoning boundary effect on land prices. Specifically, after controlling for other factors, we find that land just inside the MUL boundary is valued (per hectare) at approximately 10 times land that is just outside the boundary.

Urban Structure and Housing Prices: Some Evidence from Australian Cities*

“…There is a growing body of international evidence on the role of supply-side constraints in limiting construction and driving up prices: for example, see Gitelman and Otto (2012) for Australia; Grimes and Liang (2009) for New Zealand; Barker (2004) for the United Kingdom; Green et al (2005), Glaeser et al (2005a,b) and Saiz (2010) for the United States; and Andrews et al (2011) for a large sample of OECD economies. There is a growing body of international evidence on the role of supply-side constraints in limiting construction and driving up prices: for example, see Gitelman and Otto (2012) for Australia; Grimes and Liang (2009) for New Zealand; Barker (2004) for the United Kingdom; Green et al (2005), Glaeser et al (2005a,b) and Saiz (2010) for the United States; and Andrews et al (2011) for a large sample of OECD economies.…”

“…Although demand-side factors, especially changes in the cost and availability of finance, have clearly been very important in explaining developments in the Australian housing market over the past two decades, our results lend support to other work pointing to the role of structural factors in influencing housing market outcomes. There is a growing body of international evidence on the role of supply-side constraints in limiting construction and driving up prices: for example, see Gitelman and Otto (2012) for Australia; Grimes and Liang (2009) for New Zealand; Barker (2004) for the United Kingdom; Green et al (2005), Glaeser et al (2005a,b) and Saiz (2010) for the United States; and Andrews et al (2011) for a large sample of OECD economies. The evidence for Australia presented in Section IV is also consistent with various supplyside aspects boosting the cost of housing, although these findings are tentative given the paucity of data on land prices and zoning, and on the relationship between these variables.…”

Two Countries, Sixteen Cities, Five Thousand Kilometres: How Many Housing Markets?

“…Instead, as detailed in the Appendix, the differential long run real house price effect -in the face of an identical shock -may be due to differences in house price responses to land prices, migration responses to house prices or to land price responses to migration flows. The latter may reflect either geographical constraints (Saiz, 2010) or planning constraints (Grimes and Liang, 2009;Saks, 2008;Gyourko, Saiz and Summers, 2008;Kulish et al, 2012) each of which may affect the effective degree of land availability and hence affect the elasticity of land prices to population flows. The theoretical role of migration flows in each of these explanations accords, at least intuitively, with the nature of the dynamic responses that we estimate.…”

Urban Growth Boundaries and Betterment: Rent‐Seeking by Landowners on Melbourne's Expanding Urban Fringe

“…Containment strategies seek to increase development opportunities in some areas but limit or stop them in others, and to keep the price of agricultural land free of speculation (Buxton and Taylor 2011;Grimes and Liang 2009). Containment strategies seek to increase development opportunities in some areas but limit or stop them in others, and to keep the price of agricultural land free of speculation (Buxton and Taylor 2011;Grimes and Liang 2009).…”

“…Fringe land price differences occurring from urban containment may be attributable to supplyside restrictions, or alternatively to demand-side amenity effects. Containment strategies seek to increase development opportunities in some areas but limit or stop them in others, and to keep the price of agricultural land free of speculation (Buxton and Taylor 2011;Grimes and Liang 2009). The higher price of urban land may thus be interpreted as a capitalisation of increased certainty, demand, and amenity values (Nelson, Dawkins, and Sanchez 2007).…”