IDEAS home Printed from https://ideas.repec.org/a/eee/lauspo/v115y2022ics0264837722000722.html
   My bibliography  Save this article

Wandering in the gray: The pricing of housing restricted by land use regulation in Beijing, China

Author

Listed:
  • Li, Ling
  • Xia, Fangzhou

Abstract

Many informalities exist in the provision of affordable housing in transitional economies such as China. China’s diverse profile of informal housing demands a broader definition of informality that includes both the absence/presence and degree of property rights. In this study, we investigate the distinct phenomenon of residential housing built on commercial use land, termed commercial land (CL) housing. CL housing is characterized by incomplete property rights because it violates regulated land uses, which is further exacerbated by policies aimed at enforcing the land use regulation. The changes in the degree of property rights of CL housing provide a natural experiment to improve understanding of the dynamics of the informal housing market in China. Drawing on a large database of housing transactions in the city of Beijing, our results suggest that on average, CL housing is priced 30% lower than formal commodity housing, increasing to over 60% in situations with a lower level of property rights. The loss in value of CL housing due to government regulation amounts to 11,483 RMB (equivalent to US $1771) per square meter. We also find evidence that CL housing facilitates investment, which may have declined as a result of the regulated CL market. Overall, our findings are of theoretical and empirical significance for understanding informal housing development in China, involving complex and dynamic property rights and requiring government regulation to address housing informality.

Suggested Citation

  • Li, Ling & Xia, Fangzhou, 2022. "Wandering in the gray: The pricing of housing restricted by land use regulation in Beijing, China," Land Use Policy, Elsevier, vol. 115(C).
    • Handle: RePEc:eee:lauspo:v:115:y:2022:i:c:s0264837722000722
    DOI: 10.1016/j.landusepol.2022.106045
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0264837722000722
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.landusepol.2022.106045?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Jean O. Lanjouw & Philip I. Levy, 2002. "Untitled: A Study of Formal and Informal Property Rights in Urban Ecuador," Economic Journal, Royal Economic Society, vol. 112(482), pages 986-1019, October.
    2. Barzel,Yoram, 1997. "Economic Analysis of Property Rights," Cambridge Books, Cambridge University Press, number 9780521597135, February.
    3. Li, L. & Bao, Helen X.H. & Robinson, Guy M., 2020. "The return of state control and its impact on land market efficiency in urban China," Land Use Policy, Elsevier, vol. 99(C).
    4. He, Shenjing & Wang, Dong & Webster, Chris & Chau, Kwong Wing, 2019. "Property rights with price tags? Pricing uncertainties in the production, transaction and consumption of China’s small property right housing," Land Use Policy, Elsevier, vol. 81(C), pages 424-433.
    5. Yan, Jinming & Yang, Yumeng & Xia, Fangzhou, 2021. "Subjective land ownership and the endowment effect in land markets: A case study of the farmland “three rights separation” reform in China," Land Use Policy, Elsevier, vol. 101(C).
    6. Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
    7. Webster, Chris & Wu, Fulong & Zhang, Fangzhu & Sarkar, Chinmoy, 2016. "Informality, property rights, and poverty in China’s “favelas”," World Development, Elsevier, vol. 78(C), pages 461-476.
    8. Lanlan Wang & Tieshan Sun & Sheng Li, 2014. "Legal title, tenure security, and investment-An empirical study in Beijing," Housing Studies, Taylor & Francis Journals, vol. 29(8), pages 1117-1138, November.
    9. Alston, Lee J & Libecap, Gary D & Schneider, Robert, 1996. "The Determinants and Impact of Property Rights: Land Titles on the Brazilian Frontier," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 12(1), pages 25-61, April.
    10. Eggertsson,Thrainn, 1990. "Economic Behavior and Institutions," Cambridge Books, Cambridge University Press, number 9780521348911.
    11. Jean‐Louis Van Gelder, 2009. "Legal Tenure Security, Perceived Tenure Security and Housing Improvement in Buenos Aires: An Attempt towards Integration," International Journal of Urban and Regional Research, Wiley Blackwell, vol. 33(1), pages 126-146, March.
    12. Daron Acemoglu & Simon Johnson, 2005. "Unbundling Institutions," Journal of Political Economy, University of Chicago Press, vol. 113(5), pages 949-995, October.
    13. Lai, Yani & Zheng, Xian & Choy, Lennon H.T. & Wang, Jiayuan, 2017. "Property rights and housing prices: An empirical study of small property rights housing in Shenzhen, China," Land Use Policy, Elsevier, vol. 68(C), pages 429-437.
    14. Iban, Muzaffer Can, 2020. "Lessons from approaches to informal housing and non-compliant development in Turkey: An in-depth policy analysis with a historical framework," Land Use Policy, Elsevier, vol. 99(C).
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ling Li & Fangzhou Xia, 2023. "City subcenter as a regional development policy: Impact on the property market," Journal of Regional Science, Wiley Blackwell, vol. 63(3), pages 643-673, June.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Galiani, Sebastian & Schargrodsky, Ernesto, 2010. "Property rights for the poor: Effects of land titling," Journal of Public Economics, Elsevier, vol. 94(9-10), pages 700-729, October.
    2. Grainger, Corbett A. & Costello, Christopher J., 2014. "Capitalizing property rights insecurity in natural resource assets," Journal of Environmental Economics and Management, Elsevier, vol. 67(2), pages 224-240.
    3. Yang, Chen & Qian, Zhu, 2022. "The complexity of property rights embedded in the rural-to-urban resettlement of China: A case of Hangzhou," Land Use Policy, Elsevier, vol. 122(C).
    4. GIGNOUX, Jeremie & MACOURS, Karen & WREN-LEWIS, Liam, 2015. "Impact of land administration programs on agricultural productivity and rural development: existing evidence, challenges and new approaches," Review of Agricultural and Environmental Studies - Revue d'Etudes en Agriculture et Environnement (RAEStud), Institut National de la Recherche Agronomique (INRA), vol. 96(3), September.
    5. Lueck, Dean & Miceli, Thomas J., 2007. "Property Law," Handbook of Law and Economics, in: A. Mitchell Polinsky & Steven Shavell (ed.), Handbook of Law and Economics, edition 1, volume 1, chapter 3, pages 183-257, Elsevier.
      • Dean Lueck & Thomas J. Miceli, 2004. "Property Law," Working papers 2004-04, University of Connecticut, Department of Economics.
    6. Lin, Wanlin & Lin, George C.S., 2023. "Strategizing actors and agents in the functioning of informal property Rights: The tragicomedy of the extralegal housing market in China," World Development, Elsevier, vol. 161(C).
    7. Rui Wang & Qianmao Zhu & Matthew Noellert, 2024. "Weak central government, strong legal rights: the origins of divergent legal institutions in 18th-century Chinese and Japanese rice markets," Palgrave Communications, Palgrave Macmillan, vol. 11(1), pages 1-15, December.
    8. Lai, Yani & Wang, Jiayuan & Lok, Waiming, 2017. "Redefining property rights over collective land in the urban redevelopment of Shenzhen, China," Land Use Policy, Elsevier, vol. 69(C), pages 485-493.
    9. Mengzhu Zhang & Shenjing He, 2020. "Informal Property Rights as Relational and Functional: Unravelling the Relational Contract in China's Informal Housing Market," International Journal of Urban and Regional Research, Wiley Blackwell, vol. 44(6), pages 967-988, November.
    10. Laurel Wheeler, 2019. "Property Rights, Place-Based Policies, and Economic Development," Working Papers 19-16, Center for Economic Studies, U.S. Census Bureau.
    11. Harris,Colin & Cai,Meina & Murtazashvili,Ilia & Murtazashvili,Jennifer Brick, 2020. "The Origins and Consequences of Property Rights," Cambridge Books, Cambridge University Press, number 9781108969055.
    12. Martin Andersson & Daniel Waldenström, 2017. "Hernando de Soto: recipient of the 2017 Global Award for Entrepreneurship Research," Small Business Economics, Springer, vol. 49(4), pages 721-728, December.
    13. Hawley, Zackary & Miranda, Juan José & Sawyer, W. Charles, 2018. "Land values, property rights, and home ownership: Implications for property taxation in Peru," Regional Science and Urban Economics, Elsevier, vol. 69(C), pages 38-47.
    14. He, Shenjing & Wang, Dong & Webster, Chris & Chau, Kwong Wing, 2019. "Property rights with price tags? Pricing uncertainties in the production, transaction and consumption of China’s small property right housing," Land Use Policy, Elsevier, vol. 81(C), pages 424-433.
    15. Florencia Torche & Seymour Spilerman, 2006. "Household Wealth in Latin America," WIDER Working Paper Series RP2006-114, World Institute for Development Economic Research (UNU-WIDER).
    16. Samuel Garrido, 2010. "Mejorar y quedarse. La cesión de tierra a rentas por debajo del equilibrio en la Valencia del siglo XIX," Documentos de Trabajo de la Sociedad de Estudios de Historia Agraria 1009, Sociedad de Estudios de Historia Agraria.
    17. Ghebru, Hosaena, 2015. "Is There a Merit to the Continuum Tenure Approach? A Case of Demand for Land Rights Formulation in Rural Mozambique," 2015 Conference, August 9-14, 2015, Milan, Italy 211683, International Association of Agricultural Economists.
    18. Liesbet Vranken & Karen Macours & Nivelin Noev & Johan Swinnen, 2007. "Property Rights Imperfections, Asset Allocation, and Welfare: Co-Ownership in Bulgaria," LICOS Discussion Papers 18007, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
    19. Caio Piza & Mauricio José Serpa Barros de Moura, 2011. "How Does Land Title Affect Access to Credit? Empirical Evidence from an Emerging Economy," Working Paper Series 2211, Department of Economics, University of Sussex Business School.
    20. Luca Eufemia & Michelle Bonatti & Stefan Sieber & Barbara Schröter & Marcos A. Lana, 2020. "Mechanisms of Weak Governance in Grasslands and Wetlands of South America," Sustainability, MDPI, vol. 12(17), pages 1-23, September.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:lauspo:v:115:y:2022:i:c:s0264837722000722. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joice Jiang (email available below). General contact details of provider: https://www.journals.elsevier.com/land-use-policy .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.