Growth mismanagement, residential oversupply and housing cycles – the manifestation of un-containment planning policy in Estonia

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Urban sprawl remains a controversial issue in Estonia similarly to many Central and Eastern Europe countries in the spatio-temporal evolution of housing market. In the midst of the debate over flexibility in urban planning and joint-up territorial governance, neo-liberal planning framework coupled with the fact that 97% of the housing stock is owned by private sector has proven itself too weak for growth management, in particularly in urban fringe. This study carries out a comparative analysis of the spatio-temporal behaviour and magnitude of market shocks in uncertain macroeconomic fluctuations and residential development patterns between 2000 and 2013 in Tartu urban region. The results show that the speed and scope of planning cycles have been lagging behind real estate business cycles, having different delays and strengths of path-dependence across councils and spatial allocations. The mismatch between supply and demand amplified by the absence of strategic plans and housing policies has led to extensive detail planning which in turn manifests itself in massive ‘overbooking’ of residential land parcels as only one fifth of the planned development has been carried out in the suburbs and one third in the city. The discrepancy between issuing plans and the reality of urban development indicates that plans in an uncontrolled planning framework and volatile market are often too rigid respond to change, plus legal fixes as dynamism in national economy, housing market and population of urban region are often undermined by locality-specific local economic and political conditions. A profit-driven supply-side entrepreneurial intervention to planning during the growth years put too much emphasis on delivery of quantity, namely land supply, rather than the benefits of quality, allocation choices and social dimension, often overriding regulative frameworks.
Book of proceedings: Annual AESOP Congress, Definite Space – Fuzzy Responsibility, Prague, 13-16th July, 2015
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