LAND USE REGULATIONS AND HOUSING PRICES: AN INVESTIGATION FOR THE SPANISH CASE1

This paper analyzes the determinants of the growth of housing prices at the municipal level. In particular, we consider explicitly the effect of land use regulation on housing prices. As far as we know this is the first research of this type in the Spanish case. We also consider the effect of immigration and employment growth at the municipality level. The results show that neither land use classification nor immigrants have any statistically significant explanatory power for the growth rate of prices at the municipal level. Only the proportion of rental housing and the initial level of prices have a statistically significant effect. Therefore, although some popular explanations for the housing price boom is Spain are the effect of a large flow of immigrants and the scarcity of land, the data do not support these interpretations