JUE insight: City-wide effects of new housing supply: Evidence from moving chains

Abstract

We study the city-wide effects of new, centrally-located market-rate housing supply using geo-coded population-wide register data from the Helsinki Metropolitan Area. The supply of new market rate units triggers moving chains that quickly reach middle- and low-income neighborhoods and individuals. Thus, new market-rate construction loosens the housing market in middle- and low-income areas even in the short run. Market-rate supply is likely to improve affordability outside the sub-markets where new construction occurs and to benefit low-income people.