Housing Markets and Vacant Land

Keuschnigg, Christian and Nielsen, Soren Bo (December 1994) Housing Markets and Vacant Land. IHS Economics Series 1

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Abstract: The paper examines land use in an urban zone. We propose a partial equilibrium model of housing markets with both vacant and built up land. The existing literature assumes building decisions to be irreversible and treats any given stock ofvacant land as an exhaustible resource. By way of contrast, we argue that vacant land is built upon in finite time rather than asymptotically, and reduces to a temporary phenomenon only. When housing stocks depreciate, previously built up land is released and may be rebuilt at any structural intensity dictated by the going market conditions. The continued replacement of existing structures allows to adjust the average structural intensity in the city even if all land is built upon. We explain analytically the long-run equilibrium with full land use and demonstrate numerically that vacant land may still be an important transitional phenomenon. In particular, we emphasize the implication for land prices.;

Item Type: IHS Series
Classification Codes (e.g. JEL): R52, R31, R14
Status: Published
Date Deposited: 26 Sep 2014 10:36
Last Modified: 22 Jul 2017 05:25
URI: http://irihs.ihs.ac.at/id/eprint/801

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