Land Markets, Government Interventions, and Housing Affordability

Urban population growth and economic growth require cities to expand into the agricultural land on their periphery. How much land is required for this extension? How much planning and direct intervention by the government are needed, who should pay for extending services, and how should the costs be recovered? And how can we ensure that every participant in the urban economy has access to urban land? The solutions found for the problems posed by city expansion vary from city to city, but nowhere has a consensus appeared on what constitutes the best practices.The proper role of government in urban land development is often difficult to establish. In other sectors of the economy, the government’s role is mostly limited to that of a regulator. However, in matters of land development, the government often takes a much more active role as a de facto developer because many public goods and the primary infrastructure network cannot easily be built privately. What is required, therefore, is not to identify an “optimum model” of land development to be copied but to develop for each city (1) an analytical method to identify the shortcomings of current land delivery mechanisms, (2) a set of land development objectives (equity, affordability, transportation efficiency, etc.), and (3) a reform path to modify the existing land delivery system to meet the development objectives.