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Is Urban Land Price Adjustment More Sluggish than Housing Price Adjustment? Empirical Evidence

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  • Elias Oikarinen

Abstract

This article hypothesises that, due to factors such as thin trading and lack of publicly available data on transactions in the land market, urban land prices react more sluggishly to shocks in market fundamentals than housing prices do. Based on a vector error-correction model utilising quarterly data for the Helsinki Metropolitan Area in Finland over 1988Q1–2008Q2, the empirical analysis provides support for this hypothesis. In particular, the results suggest that new information regarding the market fundamentals is more rapidly reflected in housing prices than in land prices. Nevertheless, it is the housing price level, instead of land prices, that adjusts towards a cointegrating long-run equilibrium between housing prices, land prices and construction costs.

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  • Elias Oikarinen, 2014. "Is Urban Land Price Adjustment More Sluggish than Housing Price Adjustment? Empirical Evidence," Urban Studies, Urban Studies Journal Limited, vol. 51(8), pages 1686-1706, June.
    • Handle: RePEc:sae:urbstu:v:51:y:2014:i:8:p:1686-1706
    DOI: 10.1177/0042098013497409
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    Cited by:

    1. Rémy Le Boennec & Julie Bulteau & Thierry Feuillet, 2022. "The role of commuter rail accessibility in the formation of residential land values: exploring spatial heterogeneity in peri-urban and remote areas," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 69(1), pages 163-186, August.
    2. Zhang Wei-Bin, 2014. "Land Value and Rent Dynamics in an Integrated Walrasian General Equilibrium and Neoclassical Growth Theory," Scientific Annals of Economics and Business, Sciendo, vol. 61(2), pages 235-258, December.
    3. Wei-Bin Zhang, 2018. "Business Cycles In A General Equilibrium Dynamic Model With Land Value And Rent," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 63(216), pages 7-34, January –.
    4. Abbas Valadkhani & Russell Smyth, 2017. "Self-exciting effects of house prices on unit prices in Australian capital cities," Urban Studies, Urban Studies Journal Limited, vol. 54(10), pages 2376-2394, August.
    5. Wei-Bin Zhang, 2015. "The Dynamics of Wealth, Environment and Land Value in a Three-Sector Growth Model," South-Eastern Europe Journal of Economics, Association of Economic Universities of South and Eastern Europe and the Black Sea Region, vol. 13(2), pages 197-228.
    6. Athanasios Votsis, 2017. "Exploring the spatiotemporal behavior of Helsinki’s housing prices with fractal geometry and co-integration," Journal of Geographical Systems, Springer, vol. 19(2), pages 133-155, April.
    7. Wei-Bin Zhang, 2015. "Land Price Dynamics in a Two-Sector Growth Model," International Journal of Economics and Empirical Research (IJEER), The Economics and Social Development Organization (TESDO), vol. 3(1), pages 25-38, January.
    8. ZHANG Wei-Bin, 2015. "Values Of Land And Renewable Resources In A Three-Sector Economic Growth Model," Studies in Business and Economics, Lucian Blaga University of Sibiu, Faculty of Economic Sciences, vol. 10(1), pages 156-186, April.
    9. Nagayasu, Jun, 2016. "Inflation and Bubbles in the Japanese Condominium Market," MPRA Paper 71192, University Library of Munich, Germany.
    10. repec:beo:journl:v:62:y:2018:i:216:p:7-34 is not listed on IDEAS

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