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The impact of land policy on the relation between housing and land prices: Evidence from China

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  • Du, Hongyan
  • Ma, Yongkai
  • An, Yunbi

Abstract

This paper reviews the evolution of Chinese land policy over the past two decades and examines its impact on the dynamic relationship between housing and land prices in the Chinese real estate market. Using panel datasets from Beijing, Shanghai, Tianjin, and Chongqing, we find that there exists a long-run equilibrium between Chinese urban housing and land markets. At the same time, there is unidirectional Granger causality between housing and land prices in the short run: housing prices are Granger caused by land prices, while the reverse does not hold. We also show that urban housing markets are more informationally efficient than urban land markets. Moreover, the housing and land markets are less efficient since the adoption of a new land granting system in China in 2004, as both markets respond to market disequilibria more slowly than before.

Suggested Citation

  • Du, Hongyan & Ma, Yongkai & An, Yunbi, 2011. "The impact of land policy on the relation between housing and land prices: Evidence from China," The Quarterly Review of Economics and Finance, Elsevier, vol. 51(1), pages 19-27, February.
  • Handle: RePEc:eee:quaeco:v:51:y:2011:i:1:p:19-27
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Ge He, 2013. "Equilibrium-Oriented Housing Supply: A Case Study of Chengdu City, China," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, pages 557-568.
    2. Zhang, Yanbing & Hua, Xiuping & Zhao, Liang, 2012. "Exploring determinants of housing prices: A case study of Chinese experience in 1999–2010," Economic Modelling, Elsevier, vol. 29(6), pages 2349-2361.
    3. Liu, Taoxiong & Huang, Mengdan, 2016. "Land supply and money growth in China," International Review of Economics & Finance, Elsevier, pages 327-338.
    4. Zhang, Dingsheng & Cheng, Wenli & Ng, Yew-Kwang, 2013. "Increasing returns, land use controls and housing prices in China," Economic Modelling, Elsevier, vol. 31(C), pages 789-795.
    5. Zhou, Zhengyi, 2016. "Overreaction to policy changes in the housing market: Evidence from Shanghai," Regional Science and Urban Economics, Elsevier, pages 26-41.
    6. Xu Zhang & Xiaoxing Liu & Jianqin Hang & Dengbao Yao & Guangping Shi, 2016. "Do Urban Rail Transit Facilities Affect Housing Prices? Evidence from China," Sustainability, MDPI, Open Access Journal, vol. 8(4), pages 1-14, April.
    7. Ng, Eric C.Y., 2015. "Housing market dynamics in China: Findings from an estimated DSGE model," Journal of Housing Economics, Elsevier, vol. 29(C), pages 26-40.
    8. repec:eee:regeco:v:67:y:2017:i:c:p:1-10 is not listed on IDEAS
    9. Carlos Pestana BARROS & Zhongfei CHEN & Luis A. GIL-ALANA, 2013. "Long Memory in the Housing Price Indices in China," Asian Journal of Empirical Research, Asian Economic and Social Society, vol. 3(7), pages 785-807, July.
    10. Dong, Yilin, 2016. "A note on geographical constraints and housing markets in China," Journal of Housing Economics, Elsevier, vol. 33(C), pages 15-21.
    11. repec:gam:jsusta:v:8:y:2016:i:4:p:380:d:68415 is not listed on IDEAS

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