Interaction between Urban Expansion and Variations in Residential Land Prices: Evidence from the Cities in China

Abstract

Urban expansion is the result of the comprehensive action of various social and economic factors, among which variation in land prices is regarded as the leading factor affecting the direction and intensity of urban expansion. However, few of existing studies have explored the interaction relationship between urban expansion and variations in residential land prices, which needs to be looked at urgently in both theoretical research and decision-making practice. In this study, based on theoretical analysis, a panel vector autoregression model was constructed using the data of 104 cities in China from 2001 to 2017. The results show that there is a long-term two-way causality and mutual promotion between urban expansion and increases in residential land prices. The increase in the residential land supply caused by urban expansion will restrain the rise of residential land prices, but this effect is not sustained over the long run. Both urban expansion and residential land price rises are subject to inertia, the latter to a greater extent than the former. The results also reveal that the interaction differs for cities at different stages of economic development. Based on the analysis, policy suggestions for guiding urban expansion and further exerting macrocontrol over land market are proposed.