The public regulation of property supply and its effects on private prices, risks and returns

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Abstract
That the public regulation of property supply should affect property prices, risk and returns is to be expected. But how this works has not been adequately researched. The framework for doing this should include the following: a treatment of the three markets (development, investment and consumer) separately and in combination: an analysis of the effects, not just on prices, but on risks and returns; an analysis in the long‐ as well as the short‐term; an analysis at the level of the ‘industry’ as well as the ‘firm'; an analysis at the level of the whole country; an ‘institutional; approach to economics. A study of the housing and the office markets in the Netherlands suggests that the two most important questions concerning the public regulation of supply are: does it stimulate or restrict supply and, is regulation steady and predictable, or unstable? It is suggested in this paper that the stimulation or restriction of supply affects the general level of property prices, while steady or unpredictable regulation affects the level of return on property.