The impacts of new private housing supply on the income level of neighbourhoods

Abstract

This research examines the impact of new private housing supply on income levels in neighbourhoods. The study uses two models to analyse the changes in income levels of different neighbourhoods over a 5-year and 10-year period, controlling for demographic characteristics, education, economics, household, housing, and internal migration. The results show that new private housing supply increases the median income level of a neighbourhood, but this change takes at least 5 years to observe. The positive effect of new housing supply on income level lasts for 5 to 10 years, with new housing supply aged over ten years leading to a decrease in income levels. The effect of new private housing supply on income levels is also contingent on the building age and population density of the neighbourhood. New private housing supply brings higher-income residents to the neighbourhood, leading to the displacement of lower-income residents. The study suggests that the displacement and externality effects coexist, contributing to the positive impact of new private housing supply on income levels in urban decay neighbourhoods. These findings have important implications for policymakers and developers in understanding the complex dynamics of new private housing supply and its impact on neighbourhood income levels.