Measuring Constraint: Land Use Zoning, Urban Containment and Restrictive Development Controls

A number of land use planning approaches can operate to restrict the location and intensity of housing development. Land use zoning, which specifies permissible activities on a particular site, is a primary form of restriction. However, the intention of land use zoning is to separate incompatible land uses, rather than to restrict the amount of developable land. Further, land use zoning confers implicit development ‘rights’, so can theoretically support more responsive housing supply (Barlow 1993). By contrast, an ‘urban growth boundary’ is one of a number of techniques designed to manage and contain urban growth—and so might be regarded as inherently more restrictive than land use zoning. Given the many different ways of imposing urban growth boundaries, it is difficult to generalise between approaches—for instance, urban growth boundaries may be designated around the edges of existing settlements, requiring all future development to occur within these already built-up areas; or they might be designated many kilometres beyond a current urban periphery, providing for decades of future urban land supply. Another variant is whether the boundary is supported by provision for higher density housing within the perimeter, and whether there is capacity to extend the boundary if limits are reached.

In many nations, urban land use zoning operates as a de facto land use boundary, if the activities that may be carried out on rural lands are strictly confined. Thus, similar analytical approaches can be applied to considering the impacts of the imposition of a land use zone, or different zoning configurations, on the housing market.

In an early study of the relationship between land use zoning and house prices, researchers compared prices between areas that had introduced certain land use zoning measures, and neighbouring locations without these provisions (Pollakowski and Wachter 1990). The study followed 17 different locations covered by the Montgomery County (Maryland) Planning Board, over a 6 year period (1982-1987). A variety of zoning controls and related development regulations were examined. Many of these regulations were explicitly designed to reduce growth, including annual restrictions on the number of building permits able to be issued, minimum housing lot sizes and restrictions on multi-unit dwellings to control overall housing densities, and the practice of ‘downzoning’ (that is, reducing development potential). In seeking to understand the price effect of these regulations, the researchers acknowledged that prices could rise due to amenity (demand) impacts associated with controlled growth, or supply impacts arising from lower levels of new production. They found that price impacts appeared both within the regulated locality and in spillover areas, as the value of developed land (and established housing) rose across the wider urban region. These spillover effects were thought to offer evidence of a supply constraint effect, since the amenity benefits of growth restriction should be confined to the location in which they apply.

A more extensive study of 490 cities and counties in California examined the impact of local growth controls (adopted between 1979 and 1988) on housing construction over the decade from 1980 to 1990 (Levine 1999). The study, which used a survey of local officials to examine the prevalence of specific mechanisms of growth management, found that specific approaches—those which limited the land available for new development, or ‘downsized’ existing development potential, had the effect of displacing new construction, especially rental housing, and increasing the expansion of metropolitan areas overall (into less regulated locations). By demonstrating the differential effects of specific growth management approaches, the study seems to provide further support for Pollakowski and Wachter’s proposition that regulatory restrictions on supply, rather than amenity effects, have the greatest impacts on price.

Several other studies have compiled detailed data on local planning controls to measure effects on housing development and prices in parts of the USA (Levine 1999; Pendall 2000; Gyourko et al. 2008; Glaeser and Ward 2009), controlling for endogenous spatial and geographical features of the housing market (Hui and Ho 2003). Such work allows closer examination of the ways in which specific types of regulation operate to constrain supply rather than accommodating and even facilitating growth in a managed way (Pendall et al. 2006; Landis 2006).

Central/state government policy positions or mandates can influence the degree of restrictiveness or latitude of local planning instruments (Chamblee et al. 2009; Hui and Ho 2003; Monk and Whitehead 1999; Cotteleer and Peerlings 2010). Under discretionary planning systems, interpretation by local planners of these policy mandates also becomes important (Monk and Whitehead 1999). In the context of the ‘discretionary’ UK system, Bramley (1998, 2013) developed a series of measures of potential planning system impact. Of particular importance in both studies were: the amount of ‘unconstrained land’ (non-built-up, and not subject to strong regulatory restraint designations like Green Belt), the stock of land already permissioned or allocated in plans, strategic targets (when these existed), and (to a lesser extent) indicators of the suitabil- ity/difficulty of the land available (site size, brownfield, etc.), indicators of levels of affordable/social housebuilding supported, and indicators of informal constraint policies as well as success rates of planning applications (although this variable was particularly weak). Taken together with some market variables, these were found to be the best predictors of key outputs, such as the flow of new planning permissions, or new build completions at local area scale. At the local level these factors also significantly influenced wider outcomes including house prices, density and the proportion of apartments.

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