Marketization allocation, land price, and local government land speculation, China
Abstract
Land value appreciation in the urbanization process has triggered market speculation. The Land Bank System strengthens local governments’ ability to control land supply and distribution rights. Local governments are considered close stakeholders. Under the pressure of guaranteeing economic growth and promotion, local governments have increased their dependence on land finances. It is important for investors to understand the local governments’ behaviors, and draw up business strategies. This study aims to examine the influencing factors and formation mechanism of local government land hoarding. The research hypothesis was tested by collating provincial-level panel data of China from 2004 to 2015 and using dynamic panel data estimated by the Generalized Method of Moments (GMM). A significant positive correlation was found between residential land price and land hoarding area by local governments. Land speculation in the eastern region is also more pronounced than that in central and western regions. In addition, empirical studies have found a correlation between the degree of government intervention and local government land hoarding behavior. The higher the degree of government intervention, the less land sold through bid invitation, auction, and listing, which are linked to the corresponding hoarding land area.
Keyword : local government, land hoarding, land price, GMM, China
How to Cite
Zhang, J., Yu, T., Li, L., Zhang, D., Zhao, G., & Wen, H. (2020). Marketization allocation, land price, and local government land speculation, China. International Journal of Strategic Property Management, 24(5), 335-347. https://doi.org/10.3846/ijspm.2020.13128
This work is licensed under a Creative Commons Attribution 4.0 International License.
References
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Nichols, J. B., Oliner, S. D., & Mulhall, M. R. (2013). Swings in commercial and residential land prices in the United State. Journal of Urban Economics, 73, 57−76.
https://doi.org/10.1016/j.jue.2012.06.004
Okumura, T. (1997). Housing investment and residential land supply in Japan: an asset market approach. Journal of the Japanese and International Economies, 11, 27−54.
https://doi.org/10.1006/jjie.1996.0361
Ooi, J., Sirmans, C. F., & Turnbull, G. (2011). Government supply of land in a dual market. Real Estate Economics, 39, 167−184. https://doi.org/10.1111/j.1540-6229.2010.00290.x
Quaife, M. M., & Hoyt, H. (1934). One hundred years of land values in Chicago: the relationship of the growth of Chicago to the rise in its land values, 1830–1933. The Mississippi Valley Historical Review, 21(1), 108. https://doi.org/10.2307/1896433
Rancich, M. T. (1970). Land value changes in an area undergoing urbanization. Land Economics, 46, 32−40.
https://doi.org/10.2307/3145421
Remeikienė, R., Gasparėnienė, L., & Ginevičius, R. (2019). The specificity of the investment in land as in real estate. International Journal of Strategic Property Management, 23(4), 244−255. https://doi.org/10.3846/ijspm.2019.8092
Schmid, A. A. (1968). Converting land from rural to urban uses. American Journal of Agricultural Economics, 50(4), 1077−1078. https://doi.org/10.2307/1237657
Shen, X., Huang, X., Li, H., & Li, Y. (2018). Exploring the relationship between urban land supply and housing stock: evidence from 35 cities in China. Habitat International, 77, 80−89. https://doi.org/10.1016/j.habitatint.2018.01.005
Su, F. B., Tao, R., Xi, L., & Li, M. (2012). Local officials’ incentives and China’s economic growth: tournament thesis reexamined and alternative explanatory framework. China & World Economy, 20, 1−18.
https://doi.org/10.1111/j.1749-124X.2012.01292.x
Tewfik, M. (1989). Urban land in Jordan: issues and policies. Cities, 6, 119−135. https://doi.org/10.1016/0264-2751(89)90065-6
Tian, L., & Ma, W. J. (2008). Government intervention in city development of China: a tool of land supply. Land Use Policy, 26, 599−609. https://doi.org/10.1016/j.landusepol.2008.08.012
Wang, Q., Xu, J. X., & Zhang, Y. (2012). An empirical study of the impact of land finance on housing prices. Advances in Applied Economics & Finance, 2, 153−170.
Wen, H. Z., Chu, L. J., Zhang, J. F., & Xiao, Y. (2018). Competitive intensity, developer expectation, and land price: evidence from Hangzhou, China. Journal of Urban Planning and Development, 144, 1−11.
https://doi.org/10.1061/(ASCE)UP.1943-5444.0000490
Wu, G. L., Feng, Q., & Li, P. (2015b). Does local governments’ budget deficit push up housing prices in China? China Economic Review, 35, 183−196.
https://doi.org/10.1016/j.chieco.2014.08.007
Wu, Q., Li, Y. L., & Yan, S. Q. (2015a). The incentives of China’s urban land finance. Land Use Policy, 42, 432−442.
https://doi.org/10.1016/j.landusepol.2014.08.015
Ye, L. F., Huang, X. J., Yang, H., Chen, Z. G., Zhong, T. Y., & Xie, Z. L. (2018). Effects of dual land ownerships and different land lease terms on industrial land use efficiency in Wuxi City, East China. Habitat International, 78, 21−28.
https://doi.org/10.1016/j.habitatint.2018.04.011
Zhang, H., Zhang, Y., & Chen, T. T. (2016). Land remise income and remise price during China’s transitional period from the perspective of fiscal decentralization and economic assessment. Land Use Policy, 50, 293−300. https://doi.org/10.1016/j.landusepol.2015.10.008
Zhang, J. P., Fan, J. Y., & Mo, J. W. (2017). Government the intervention, land market, and the urban development: evidence from Chinese cities. Economic Inquiry, 55, 115−136. https://doi.org/10.1111/ecin.12353
Zhong, T., Qian, Z., Huang, X. J., Zhao, Y. T., Zhou, Y., & Zhao, Z. H. (2018). Impact of the top-down quota-oriented farmland preservation planning on the change of urban land-use intensity in China. Habitat International, 77, 71−79.
https://doi.org/10.1016/j.habitatint.2017.12.013
https://doi.org/10.1111/j.1475-4932.1972.tb01534.x
Bentick, B. L. (2010b). The allocation of land between speculators and users under a land ownership tax: a reply. Economic Record, 50, 449−450.
https://doi.org/10.1111/j.1475-4932.1974.tb00804.x
Bourassa, S. C., Hoesli, M., Scognamiglio, D., & Zhang, S. (2010). Land leverage and house prices. Regional Science and Urban Economics, 41, 134−144. https://doi.org/10.2139/ssrn.1715532
Davis, M. A. (2009). The price and quantity of land by legal form of organization in the United States. Regional Science and Urban Economics, 39, 350−359.
https://doi.org/10.1016/j.regsciurbeco.2009.01.002
Deng, X. Z., Huang, J. K., Rozelle, S., & Uchida, E. (2006). Growth, population and industrialization, and urban land expansion of China. Journal of Urban Economics, 63, 96−115. https://doi.org/10.1016/j.jue.2006.12.006
Dong, Y. L. (2016). A note on geographical constraints and housing markets in China. Journal of Housing Economics, 33, 15−21. https://doi.org/10.1016/j.jhe.2016.06.003
Du, H. Y., Ma, Y. K., & An, Y. B. (2010). The impact of land policy and the relation between housing land prices: evidence from China. Quarterly Review of Finance and Economics, 51, 19−27. https://doi.org/10.1016/j.qref.2010.09.004
Du, J. F., & Peiser, R. B. (2014). Land supply, pricing and local governments’ land hoarding in China. Regional Science and Urban Economics, 48, 180−189.
https://doi.org/10.1016/j.regsciurbeco.2014.07.002
Golland, A., & Boelhouwer, P. (2002). Speculative housing supply land and housing, markets: a comparison. Journal of Property Research, 19, 231−251.
https://doi.org/10.1080/09599910210151332
Goodman, A. C., & Thibodeau, T. G. (2008). Where are the speculative bubbles in US housing markets? Journal of Housing Economics, 17, 117−137.
https://doi.org/10.1016/j.jhe.2007.12.001
Grout, C. A., Jaeger, W. K., & Plantinga, A. J. (2011). Land-use regulations and property values in Portland, Oregon: a regression discontinuity design approach. Regional Science & Urban Economics, 41, 98−107.
https://doi.org/10.1016/j.regsciurbeco.2010.09.002
Ho, S., & Lin, G. (2003). Emerging land markets in rural and urban China: policies and practices. China Quarterly, 175, 681−707. https://doi.org/10.1017/S0305741003000407
Huang, D., & Chan, R. C. K. (2018). On ‘Land Finance’ in urban China: theory and practice. Habitat International, 75, 96−104. https://doi.org/10.1016/j.habitatint.2018.03.002
Hui, C. M. (2004). An empirical study of the effects of land supply and lease conditions on the housing market: a case of Hong Kong. Property Management, 22, 127−154.
https://doi.org/10.1108/02637470410532402
Hui, E. C. M., Zhong, J., & Yu, K. (2017). Property prices, housing policies for collateral and resale constraints. International Journal of Strategic Property Management, 21(2), 115−128. https://doi.org/10.3846/1648715X.2016.1249984
Ihlanfeldt, K. R. (2006). The effect of land use regulation on housing and land prices. Journal of Urban Economics, 61,
420−435. https://doi.org/10.1016/j.jue.2006.09.003
Jiang, M., Xin, L. J., Li, X. B., & Tan, M. H. (2016). Spatiotemporal variation of China’s state-owned construction land supply from 2003 to 2014. Sustainability, 8, 1−16.
https://doi.org/10.3390/su8111137
Koster, H. R. A., Ommeren, J. V., & Rietveld, P. (2012). Bombs, boundaries and buildings: a regression-discontinuity approach to measure costs of housing supply restrictions. Regional Science & Urban Economics, 42, 631−641.
https://doi.org/10.1016/j.regsciurbeco.2012.02.007
Lavin, A. M., & Zorn, T. S. (2001). Empirical tests of the fundamental-value hypothesis in land markets. The Journal of Real Estate Finance and Economics, 22, 99−116. https://doi.org/10.1023/A:1007883427681
Lichtenberg, E., & Ding, C. R. (2008). Assessing farmland protection policy in China. Land Use Policy, 25, 59−68.
https://doi.org/10.1016/j.landusepol.2006.01.005
Lin, G., & Ho, S. (2005). The state, land system, and land development processes in contemporary China. Annals of the Association of American Geographers, 95, 411−436.
https://doi.org/10.1111/j.1467-8306.2005.00467.x
Liu, G. W., Li, K. J., Shrestha, A., Martek, I., & Zhou, Y. (2018a). Strategic business model typologies evident in the Chinese real-estate industry. International Journal of Strategic Property Management, 22(6), 501−515. https://doi.org/10.3846/ijspm.2018.6275
Liu, Y. S., Li, J. T., & Yang, Y. Y. (2018b). Strategic adjustment of land use policy under the economic transformation. Land Use Policy, 74, 5−14.
https://doi.org/10.1016/j.landusepol.2017.07.005
Liu, Z., Liu, S. H., Qi, W., & Jin, H. R. (2018c). Urban sprawl among Chinese cities of different population sizes. Habitat International, 79, 89−98. https://doi.org/10.1016/j.habitatint.2018.08.001
Mercy, B. L. (2011). Capturing land value increment to finance infrastructure investment-Possibilities for South Africa. Urban Forum, 22, 37−52. https://doi.org/10.1007/s12132-010-9108-3
Murray, M. P. (2006). Avoiding invalid instruments and coping with weak instruments. Journal of Economic Perspectives, 20, 111−132. https://doi.org/10.1257/jep.20.4.111
Nichols, J. B., Oliner, S. D., & Mulhall, M. R. (2013). Swings in commercial and residential land prices in the United State. Journal of Urban Economics, 73, 57−76.
https://doi.org/10.1016/j.jue.2012.06.004
Okumura, T. (1997). Housing investment and residential land supply in Japan: an asset market approach. Journal of the Japanese and International Economies, 11, 27−54.
https://doi.org/10.1006/jjie.1996.0361
Ooi, J., Sirmans, C. F., & Turnbull, G. (2011). Government supply of land in a dual market. Real Estate Economics, 39, 167−184. https://doi.org/10.1111/j.1540-6229.2010.00290.x
Quaife, M. M., & Hoyt, H. (1934). One hundred years of land values in Chicago: the relationship of the growth of Chicago to the rise in its land values, 1830–1933. The Mississippi Valley Historical Review, 21(1), 108. https://doi.org/10.2307/1896433
Rancich, M. T. (1970). Land value changes in an area undergoing urbanization. Land Economics, 46, 32−40.
https://doi.org/10.2307/3145421
Remeikienė, R., Gasparėnienė, L., & Ginevičius, R. (2019). The specificity of the investment in land as in real estate. International Journal of Strategic Property Management, 23(4), 244−255. https://doi.org/10.3846/ijspm.2019.8092
Schmid, A. A. (1968). Converting land from rural to urban uses. American Journal of Agricultural Economics, 50(4), 1077−1078. https://doi.org/10.2307/1237657
Shen, X., Huang, X., Li, H., & Li, Y. (2018). Exploring the relationship between urban land supply and housing stock: evidence from 35 cities in China. Habitat International, 77, 80−89. https://doi.org/10.1016/j.habitatint.2018.01.005
Su, F. B., Tao, R., Xi, L., & Li, M. (2012). Local officials’ incentives and China’s economic growth: tournament thesis reexamined and alternative explanatory framework. China & World Economy, 20, 1−18.
https://doi.org/10.1111/j.1749-124X.2012.01292.x
Tewfik, M. (1989). Urban land in Jordan: issues and policies. Cities, 6, 119−135. https://doi.org/10.1016/0264-2751(89)90065-6
Tian, L., & Ma, W. J. (2008). Government intervention in city development of China: a tool of land supply. Land Use Policy, 26, 599−609. https://doi.org/10.1016/j.landusepol.2008.08.012
Wang, Q., Xu, J. X., & Zhang, Y. (2012). An empirical study of the impact of land finance on housing prices. Advances in Applied Economics & Finance, 2, 153−170.
Wen, H. Z., Chu, L. J., Zhang, J. F., & Xiao, Y. (2018). Competitive intensity, developer expectation, and land price: evidence from Hangzhou, China. Journal of Urban Planning and Development, 144, 1−11.
https://doi.org/10.1061/(ASCE)UP.1943-5444.0000490
Wu, G. L., Feng, Q., & Li, P. (2015b). Does local governments’ budget deficit push up housing prices in China? China Economic Review, 35, 183−196.
https://doi.org/10.1016/j.chieco.2014.08.007
Wu, Q., Li, Y. L., & Yan, S. Q. (2015a). The incentives of China’s urban land finance. Land Use Policy, 42, 432−442.
https://doi.org/10.1016/j.landusepol.2014.08.015
Ye, L. F., Huang, X. J., Yang, H., Chen, Z. G., Zhong, T. Y., & Xie, Z. L. (2018). Effects of dual land ownerships and different land lease terms on industrial land use efficiency in Wuxi City, East China. Habitat International, 78, 21−28.
https://doi.org/10.1016/j.habitatint.2018.04.011
Zhang, H., Zhang, Y., & Chen, T. T. (2016). Land remise income and remise price during China’s transitional period from the perspective of fiscal decentralization and economic assessment. Land Use Policy, 50, 293−300. https://doi.org/10.1016/j.landusepol.2015.10.008
Zhang, J. P., Fan, J. Y., & Mo, J. W. (2017). Government the intervention, land market, and the urban development: evidence from Chinese cities. Economic Inquiry, 55, 115−136. https://doi.org/10.1111/ecin.12353
Zhong, T., Qian, Z., Huang, X. J., Zhao, Y. T., Zhou, Y., & Zhao, Z. H. (2018). Impact of the top-down quota-oriented farmland preservation planning on the change of urban land-use intensity in China. Habitat International, 77, 71−79.
https://doi.org/10.1016/j.habitatint.2017.12.013