Land Markets, Government Interventions and Housing Affordability

This paper discusses both the need for governments to act to ensure that land with infrastructure and services is available for urban expansion and the form that government intervention in urban land development should take. Failure to provide enough land for urban expansion results in high housing prices, exacerbates the creation of high-density slums and generally lowers urban productivity.

The paper is divided into five sections. The first provides a brief historical perspective on the evolution of land and housing policy from the building technology focus of the 1960s to the current emphasis on land supply reforms. It points to the gap between the trends in the land economics literature and actual policies as implemented by governments. The next section proposes an analytical framework for analyzing the land delivery system from a distributive and spatial point of view, and compares land consumption between countries and within cities. The third section analyzes the way government intervenes indirectly in the land market through regulations and infrastructure investments. Often apparently innocuous regulations tend to force an increase in land consumption and, at the same time, restrict land supply. Transport infrastructure is often designed more to alleviate traffic than to open new land for development. The fourth section analyzes the current various land delivery systems in India, South Korea, China and Thailand, within the framework developed in the first two sections. The last section proposes an agenda for action; first, by proposing a methodology for assessing how the current delivery system in a given city meets the different objectives of equity and transportation efficiency; and second, by establishing a framework for future research.