The amplifying effect of spatial planning restrictions on house prices and rents

This is the authors' abstract. We don't add key points for this paper.

This paper examines how spatial planning restrictions shape housing cost responses to demand shocks. Using a detailed micro-level dataset from Switzerland, we analyze the effects of land reserves, density limits, refusal rates, and overall regulatory constraints. Our dynamic model shows that stricter planning regulations significantly amplify housing cost growth, with stronger effects on house prices than rents. We validate these findings using a Bartik-style instrumental variable strategy. The paper contributes to the literature by jointly analyzing prices and rents and identifying amplification effects across distinct regulatory tools. While based on Swiss data, the underlying institutional features, local control, and strong demand are common elsewhere, making the findings broadly relevant. • Stricter planning rules amplify demand shocks on house prices and rents. • Density limits, refusal rates, and low land reserves heighten price growth most. • Price responses exceed rent responses due to lower supply elasticity in ownership.