Study On The Effects Of Land Supply Mode And Land Supply Amount On Real Estate Price

In recent years, the rising of real estate price became a hot issue in China. Lots of people debate on the relationship between land supply, land granting ways and housing price, especially after "The Regulation on Granting Land Rights over State-Owned Land through Auction, Tender and Nominal Quotation" and "Decree No. 71 of 2004" were announced. Lots of people owned the rise of housing price to "public land leasing" and the inadequate land supply. The existing literatures on this issue in China often use qualitative analysis. Few quantitative analyses were nearly all about the relationship between land price and housing price with macro data. As a result of such theoretical deficiency, government and company's decision-making become rather difficult. Under this background, this dissertation researched on the effect of land supply mode and land supply amount on real estate price systematically. Several quantitative models were constructed; lots of case studies and empirical studies were done.By adopting tax incidence theory, this study put forward that whether the reform of land granting ways affect real estate price depending on the price elasticity of housing supply and housing demand. On relationships between land supply amount and housing price, this research put forward that, as "Plot Ratio" is restricted in Mainland China, reduction of land supply amount may result in inadequate houses supply and boost housing price finally. But this didn't mean that increase of land supply amount would cut down housing price definitely. In a time when housing price was undergoing an upsurge, increment of land supply amount may have little effect on controlling housing price because the developers might not develop land or sell out houses quickly.On how land supply mode affect real estate price, this research did three parts of empirical studies. First, an empirical study using Granger Causality and city comparisons method was done. The price indices of the whole country and 35 large and medium-sized cities were samples. The results showed that, the relationships between the reform, land price and real estate price were quite complicated. Different study areas may have different mechanisms. In a city, when the demands for houses were strong, the reform would boost real estate price greatly. Second, this research analyzed the effects of public land leasing on housing price taking Hangzhou as case study area. By market investigation, this study found that when a high-priced parcel of land was born, the real-estate projects nearby often raise their selling prices, but whether the new prices would be accepted by consumers was decided by market. Besides, a hedonic model based on 97 real-estate projects selling in 2005 found that housing price had no statistically significant relationship with public granting ways. Third, this research did case studies on "Country Property Rights Houses", "Price-restricted Land Granting mode" and "90/70 polices". Beijing, Guangzhou and Hangzhou were study areas.On how land supply amount affect real estate price, two empirical studies were done. First, two panel data models were constructed to test how land supply affect real estate price. The results showed that the increment of land supply last year had positive effects on house supply and negative effects on real estate price. Both two coefficients were statistically significant, but the impact was very little. Besides, land supply amount two years ago had positive effects on house supply but had no statistically significant effects on real estate price. Second, a case study of Hangzhou was done to analyses the relationships between land supply, land development and housing price. Descriptive analysis showed that, there was no clear evidence that the rising of housing price since 2000 in Hangzhou was caused by inadequate land supply. On the contrary, land supply amount was more deeply affected by housing price. Then, by tracking the 141 parcels of land which were public granted for residential use during 2000 to 2005, this study found that some parcels of land had longer development cycles when Hangzhou's housing price had an upsurge during 2002-2004 and 2007.Through theoretical analyses and empirical studies, this dissertation may have innovations in the following aspects: (1) Adopting tax incidence theory to explore how reform of land granting ways affect real estate price. Theory analysis and empirical studies showed that the reform would affect real estate price greatly where demand for houses were very strong; (2) Market investigation on Hangzhou by tracking how high-priced land developed and what was the effects of "King Land" on the price of real-estate projects nearby showed that market was the real hand in deciding housing price and land price. Besides, a Hedonic model based on the real-estate projects selling in 2005 showed that housing price has no statistically significant relationship with public land granting. (3) Did a study on "Dual Restrictions and Competing" land granting mode and got referential results. (4) Did a quantitative analysis on how land supply amount affect real estate price using panel data models. The results showed that increasing land supply help to pull down real estate price next year but the impact was very little. (5) Theoretical analysis and empirical studies showed that, when housing price was undergoing an upsurge, the land development cycles would be longer in a whole.Restricted by data and time, this study had several shortcomings, such as didn't adopt housing price in all empirical study parts, not rigorous enough in researching relationships between price elasticity, land granting ways reform and real estate price. After all, this dissertation has made the first step. Theoretical analysis and quantitative models can be done more profoundly in the future.