Forms and Norms: How Planning Affected Housing Prices Variation in Italy During the Crisis

According to numerous studies in the literature, urban planning norms have an important effect on housing prices. A large quantity of data and empirical studies focusing on building restrictions and housing prices refer to the American real estate market. The current study, instead, set out to examine the relationship between city-planning and the cost of housing in the Italian real estate market. While, however, recent studies carried out here have prevalently focused on the boom phase of the real estate cycle, the present study primarily probes the bust period. We used a multivariate regression model to analyze the effect of urban planning norms on housing (new and existing units) price variation. The model shows that in those localities where building regulations had permitted more buildings to be constructed during the boom phase, prices fell to deeper level during the bust one. These findings have implications with regard to the real estate crisis as well as to housing affordability policies here in Italy and elsewhere.