Urban Land Supply, Urban Growth, and Housing Prices in China

Abstract

In the pursuit of rapid urban economic growth, the urban land supply policy has prioritized non-residential land uses in China. A two-sector urban economic model and the empirical analyses using a cross city dataset between 2003 and 2010 from China show that, increasing the share of non-residential land increases the urban wage rate, housing prices and output per capita, but decreases the population size, and a inverse U-shaped relationship between the share of non-residential land and total economic output. Then, the question of how neighborhood land supply patterns influence housing prices is explored. The study reveals that the shares of commercial, industrial and public service land supply in neighborhoods over the past five years have had positive impacts on Beijing?s housing values. My research concludes that prioritizing non-residential land uses has resulted in the surge of housing prices as well as the lagging urbanization in China.