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The Relationship between Land Prices and Housing Prices in Iran

Author

Listed:
  • Mohamadzadeh, Parviz

    () (Associate Professor of Economics, University of Tabriz, Tabriz, Iran)

  • Panahi, Hossein

    () (Associate Professor of Economics, University of Tabriz, Tabriz, Iran)

  • Aleemran, Seyed Ali

    () (Ph.D. Student in Economics, University of Tabriz, Tabriz, Iran)

Abstract

The Objective of this research is to study the relationship between land price and housing prices in Iran according to the mutual causation perspective. Based on Haizhen and Allen (2013) model and using a simultaneous equations system and two-stage least squares method to study the issue between the first quarter of 1998 to the fourth quarter of 2012. The results of Toda and Yamamoto causality and Hausman test indicates that there are bilateral causality between land prices and housing prices and the results of two-stage least squares method indicate that rising land prices have increased housing prices and rising housing prices have increased land prices. It is suggested that due to the special characteristics of land such as (no depreciation and low maintenance costs), reduced the storage of land by using tax and interdiction and specific incentive policies and led to the proportional transfer in supply and demand for land by reducing unemployment and rising income and demand.

Suggested Citation

  • Mohamadzadeh, Parviz & Panahi, Hossein & Aleemran, Seyed Ali, 2016. "The Relationship between Land Prices and Housing Prices in Iran," Quarterly Journal of Applied Theories of Economics, Faculty of Economics, Management and Business, University of Tabriz, vol. 3(1), pages 89-114, June.
  • Handle: RePEc:ris:qjatoe:0035
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    More about this item

    Keywords

    Land price; Housing price; Toda and Yamamoto causality; Simultaneous equations;

    JEL classification:

    • C30 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - General
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • P25 - Economic Systems - - Socialist Systems and Transition Economies - - - Urban, Rural, and Regional Economics
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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