Research On Interaction Mechanism Between China’s Urban Land Market And Housing Market In Microscopic Perspective

The interaction between land market and housing market has always been atheoretical and practical hotspot being focused on and argued with at home and abroad.Over the past decade, the debate was sharpened in China due to its rapidly ongoinggrowth of urban land price and housing price. Furthermore, the impact of the localgovernment’s monopoly position in the urban land market and the resulting so-calledland-finance behavior under China’s specific institution on such interaction cannot beignored easily, which makes the special research on the interaction relationship betweenurban land and housing markets much more complex and necessary.Based on the theory of derived demand of land market and the theory of pricediscovery of housing market, the Signal-Expectation Model (SEM), describing thetheoretical frame of the interaction between land market and housing market under themicroscopic perspective and ideal condition, is raised with the prices being used as theinter-market signals. According to SEM, the dissertation essentially analysis theprerequisites and the variation pattern of the endogenous relationship between landprice and housing price, which is the key issue of the interaction between the twomarkets, and the impact of local government’s behavior under China’s specificinstitution on such interaction. Additionally, the systematical empirical research isconducted for the SEM with the data from Beijing’s land market and housing market.The empirical results excellently support the theoretical model, demonstrate the leveland the variation pattern of the interaction between markets and illustrate the impact oflocal government’s behavior on the market.The main theoretical findings and empirical conclusions are:(1) in microscopicperspective, the housing price influences the land price and the land’s time todevelopment through the mechanism of derived demand, while the land price influencesthe housing price and the its sale probability through the process of price discovery,where the prices here are essential to connect one market to each other;(2) theendogenous relationship and the equilibrium result between land and housing prices arecontingent to exist and vary;(3) the land-finance behavior intensify the process of pricediscovery in housing market;(4) the monopoly competition structure and the inefficiency are significant in Beijing’ housing market, while the complete monopolystructure exists in Beijing’s land market;(5) the endogenous relationship between landand housing prices is significant in Beijing, where the government pushes up thehousing price through the land-finance behavior;(6) the sale probability of housingmarket is positively related to the surrounding land price, but the degree of suchcorrelation changes according to the spatial distance and the market trend;(7) theincreasing of housing price is to raise the probability of land-transfer by the localgovernment, the monopoly power of the local government, however, will prolong thetime on the market.The findings and conclusions imply the political suggestions that the property taxreform covering personal residential, the system of local government bond and theusage adjustment of land transfer income should be promoted step by step. Contingentlyon such promoting, furthermore, the autrority of urban land management should bediscentralized and moved down. The sugeestions is helpful to optimize the incomestructure of the local government, to enhance the contestability of urban land marketand to impair the impact of local government on the operation of urban land andhousing markets, which is, finanally, benefit to the virtuous interaction between landmarket and housing market, the stable and healthy development of housing market andthe progress of the urbanization.