Land supply, land speculation and housing price: Evidence from four municipalities in China

To study the relation between land supply, land speculation and housing price in China, this paper establish a stock adjustment model by incorporating land supply into housing demand and supply function. The model is estimated using quarterly panel data in Beijing, Tianjin, Shanghai and Chongqing from 1999 to 2010. The conclusions are as follows. (1) Compared to the traditional fundamental factors, land supply is playing a vital role in housing price movements from both demand-side by affecting expectation formation and supply-side by influencing land banking and factor cost in China. (2)In transition economy, the regime shift of land supply in the end of 2004 has promoted the maturing of property market and improved market efficiency due to less irrational land speculations by homebuyers and real estate developers resulting from market-oriented transformation of land supply regime, releasing of land supply plans and strengthening on development regulations.