IDEAS home Printed from https://ideas.repec.org/a/wsi/cjuesx/v04y2016i03ns2345748116500263.html
   My bibliography  Save this article

Which is Driver? Land Price or Housing Price: Examining the Urban Spatial Structure of Beijing

Author

Listed:
  • Chengri DING

    (Urban Studies and Planning, University of Maryland, College Park, MD 20742, USA)

  • Yi NIU

    (International School of Economics and Management, Capital University of Economics and Business, 121 Zhangjialukou, Fengtai District, Beijing 100070, China)

Abstract

This paper examines the spatial structure of Beijing to determine the relationship between land price and housing price. The purposes of the paper are two-fold. One is to help to better understand the roles in which land markets play in urban development and the other is to explain skyrocketing land prices, particularly in the first decade of the 21st century. It has been debated whether land supply is the main cause for skyrocketing land prices. This paper, however, concludes that it is housing price that drives up skyrocketing land prices. The analytical framework to draw the conclusion is to investigate urban spatial development patterns to see if they are consistent with the outcomes of urban model/theory in which land is treated as a production factor for housing and land demand is a derived demand. If the answer is yes, we can conclude the driving role of housing prices on land prices, even though we recognize the effect of land supply restrictions on land prices. So the paper first examines the urban spatial pattern of Beijing, with reference to urban economic model. And then the paper estimates the parameters of a CES-type housing production function. The paper conducts numerical simulation to illustrate how a small increase in housing prices will lead to big increases in land prices. The paper concludes (1) effective roles of price mechanism in land and urban development as manifested by relatively fast decay of land prices compared to housing prices, as expected according to urban theory; and (2) a 25% increase in housing price can lead to 50–125% increases in land prices, depending on the distance to city center. We believe that our finding has substantial policy implications in China.

Suggested Citation

  • Chengri DING & Yi NIU, 2016. "Which is Driver? Land Price or Housing Price: Examining the Urban Spatial Structure of Beijing," Chinese Journal of Urban and Environmental Studies (CJUES), World Scientific Publishing Co. Pte. Ltd., vol. 4(03), pages 1-13, September.
  • Handle: RePEc:wsi:cjuesx:v:04:y:2016:i:03:n:s2345748116500263
    DOI: 10.1142/S2345748116500263
    as

    Download full text from publisher

    File URL: http://www.worldscientific.com/doi/abs/10.1142/S2345748116500263
    Download Restriction: Access to full text is restricted to subscribers

    File URL: https://libkey.io/10.1142/S2345748116500263?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. McDonald, John F., 1981. "Capital-land substitution in urban housing: A survey of empirical estimates," Journal of Urban Economics, Elsevier, vol. 9(2), pages 190-211, March.
    2. Fare, Rolf & Yoon, Bong Joon, 1985. "On capital-land substitution in urban housing production," Journal of Urban Economics, Elsevier, vol. 18(1), pages 119-124, July.
    3. Bertaud, Alain & Brueckner, Jan K., 2005. "Analyzing building-height restrictions: predicted impacts and welfare costs," Regional Science and Urban Economics, Elsevier, vol. 35(2), pages 109-125, March.
    4. Isil Erol & Guzel Alper, 2003. "The Elasticity of Capital - Land Substitution in the Housing Construction Sector of a Rapidly Urbanized City: Case Study of Ankara," ERES eres2003_150, European Real Estate Society (ERES).
    5. David E. Dowall, 1992. "A Second Look at the Bangkok Land and Housing Market," Urban Studies, Urban Studies Journal Limited, vol. 29(1), pages 25-37, February.
    6. Brueckner, Jan K., 1987. "The structure of urban equilibria: A unified treatment of the muth-mills model," Handbook of Regional and Urban Economics, in: E. S. Mills (ed.), Handbook of Regional and Urban Economics, edition 1, volume 2, chapter 20, pages 821-845, Elsevier.
    7. Paul Metzemakers & Erik Louw, 2005. "Land as production factor," ERSA conference papers ersa05p220, European Regional Science Association.
    8. Dowall, David E. & Alan Treffeisen, P., 1991. "Spatial transformation in cities of the developing world : Multinucleation and land-capital substitution in Bogota, Colombia," Regional Science and Urban Economics, Elsevier, vol. 21(2), pages 201-224, July.
    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. Fan, Jianshuang & Zhou, Lin & Yu, Xiaofen & Zhang, Yanjiang, 2021. "Impact of land quota and land supply structure on China’s housing prices: Quasi-natural experiment based on land quota policy adjustment," Land Use Policy, Elsevier, vol. 106(C).

    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. Christian A. L. Hilber, 2017. "The Economic Implications of House Price Capitalization: A Synthesis," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 45(2), pages 301-339, April.
    2. Dascher, Kristof, 2019. "Function Follows Form," Journal of Housing Economics, Elsevier, vol. 44(C), pages 131-140.
    3. Lehe, Lewis, 2014. "Inclusionary Zoning in a Monocentric City," Institute of Transportation Studies, Research Reports, Working Papers, Proceedings qt6qp1j5bj, Institute of Transportation Studies, UC Berkeley.
    4. Chengri Ding, 2004. "Urban Spatial Development in the Land Policy Reform Era: Evidence from Beijing," Urban Studies, Urban Studies Journal Limited, vol. 41(10), pages 1889-1907, September.
    5. Satyajit Chatterjee & Burcu Eyigungor, 2017. "A Tractable City Model For Aggregative Analysis," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 58(1), pages 127-155, February.
    6. Agrawal, David R. & Zhao, Weihua, 2023. "Taxing Uber," Journal of Public Economics, Elsevier, vol. 221(C).
    7. Jason Barr & Remi Jedwab, 2023. "Exciting, boring, and nonexistent skylines: Vertical building gaps in global perspective," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 51(6), pages 1512-1546, November.
    8. Borck, Rainald, 2016. "Will skyscrapers save the planet? Building height limits and urban greenhouse gas emissions," Regional Science and Urban Economics, Elsevier, vol. 58(C), pages 13-25.
    9. Jan K. Brueckner & Shihe Fu & Yizhen Gu & Junfu Zhang, 2017. "Measuring the Stringency of Land Use Regulation: The Case of China's Building Height Limits," The Review of Economics and Statistics, MIT Press, vol. 99(4), pages 663-677, July.
    10. Jedwab, Remi & Barr, Jason & Brueckner, Jan K., 2022. "Cities Without Skylines: Worldwide Building-Height Gaps and their Possible Determinants and Implications," Journal of Urban Economics, Elsevier, vol. 132(C).
    11. Wadjidou Boukari & Fenjie Long, 2023. "Reducing urban sprawl by optimizing housing production," Growth and Change, Wiley Blackwell, vol. 54(2), pages 529-549, June.
    12. Hirte, Georg & Min, Hyuk-Ki & Rhee, Hyok-Joo, 2022. "Regulation versus taxation: Efficiency of zoning and tax instruments as anti-congestion policies," Journal of Housing Economics, Elsevier, vol. 56(C).
    13. Ahlfeldt, Gabriel M. & Barr, Jason, 2022. "The economics of skyscrapers: A synthesis," Journal of Urban Economics, Elsevier, vol. 129(C).
    14. William D. Larson & Justin Contat, 2021. "Transaction Composition and House Price Index Measurement: Evidence from a Repeat-Sales Aggregation Index," FHFA Staff Working Papers 21-01, Federal Housing Finance Agency.
    15. Rainald Borck & Jan K. Brueckner, 2018. "Optimal Energy Taxation in Cities," Journal of the Association of Environmental and Resource Economists, University of Chicago Press, vol. 5(2), pages 481-516.
    16. Larson, William & Yezer, Anthony, 2015. "The energy implications of city size and density," Journal of Urban Economics, Elsevier, vol. 90(C), pages 35-49.
    17. Mariaflavia Harari, 2020. "Cities in Bad Shape: Urban Geometry in India," American Economic Review, American Economic Association, vol. 110(8), pages 2377-2421, August.
    18. Thorsnes, Paul, 1997. "Consistent Estimates of the Elasticity of Substitution between Land and Non-Land Inputs in the Production of Housing," Journal of Urban Economics, Elsevier, vol. 42(1), pages 98-108, July.
    19. Tideman, Nicolaus & Plassmann, Florenz, 2018. "The effects of changes in land value on the value of buildings," Regional Science and Urban Economics, Elsevier, vol. 69(C), pages 69-76.
    20. Proque, Andressa Lemes & dos Santos, Gervásio Ferreira & Betarelli Junior, Admir Antonio & Larson, William D., 2020. "Effects of land use and transportation policies on the spatial distribution of urban energy consumption in Brazil," Energy Economics, Elsevier, vol. 90(C).

    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:wsi:cjuesx:v:04:y:2016:i:03:n:s2345748116500263. 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: Tai Tone Lim (email available below). General contact details of provider: http://www.worldscinet.com/cjues/cjues.shtml .

    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.