Impacts of Land Supply Factors on Housing Price: An Hedonic Price Model on Chengdu, China

Abstract

The relationship between housing price and land price is one of most important issues in Mainland of China, which is concerned by developers, consumers and government. However, this issue is often discussed on the theoretical level. This paper suggests an alternative and meaningful model on testing the relationship between housing price and land supply factors. The study is based on land parcels' information and relevant housing developments information of Chengdu, the capital of Sicuan Province, from 1999 to 2004. This paper choose an basic angle to study the relationship between housing price and land factors that are included in parcel area, land lease mode, land price etc. The Hedonic price model is applied in this paper to measure the implicit price of different factors of land. The empirical results present that: (1) If other factors keep stable, the elasticity of land price to housing price is very small. This means that housing price is not impacted by land cost very much; (2) Land supply mode has very significant impact on housing price. Paper compares three kinds of mode. They are agreement supply (mode 1), ownership transfer mode (mode 2) and public auction (mode 3). Average housing price of mode 2 is 8.7% higher than that of mode 1. And, average housing price of mode 3 is 15.8% higher than that of mode 1; (3) Lot area has positive impact on housing price. If other factors keep stable, For example, the average housing price on the land over 100,000 m2 is 13.4% higher than that on the land below 10,000 m2. Followed by discussion of the findings of empirical study on the impacts of the land supply factors on housing price in Chengdu, some proposals are given as follow. The conclusions and proposals from this paper should also be applicable to other places of Mainland China