Supply Elasticity Estimates for the Sydney Housing Market

This article presents estimates of the supply elasticity for residential property in metropolitan Sydney over the period 19912006. Our results suggest that supply is inelasticless than unityfor all types of housing, although the supply elasticity is relatively larger for strata properties (apartments and flats) than for non-strata properties (separate and semi-detached houses, terraces and townhouses). We also find evidence of a significant fall in supply elasticity between 19911996 and 20012006. When the median time taken by a local council to decide on a development application is included in the supply curve, it is found to have a negative effect on the supply of residential property. However, split-sample estimates indicate this effect is largely confined to the 19911996 period.