Housing Price Expectations, Land Prices and Behavior of Real Estate Enterprises

Abstract

Abstract:

Based on an analysis of the "Corn Laws Paradox" in the land market, this paper builds a land price model taking real estate investment decisions and housing price expectations into account. We re-analyze the affect pathway from real estate market to land market, and explore the housing price expectations of real estate enterprises and their behavior in the land market. We adopt the logic order "first testing the effectiveness of instrumental variables, then judging the endogenous of the model and finally determining the model form" to avoid model misspecification. The results show that the housing price expectations of real estate enterprises have significant impact on their behavior in the land market, and that the faster they adjust housing price expectations, the better they perform in the land market. This paper also shows that in China's land markets, the land prices are mainly affected by the housing price expectations but not by housing prices themselves.

Key words: housing price expectations, land prices, behavior of real estate enterprises, adjustment speed of expectations

Zhang Hao, Li Zhongfei. Housing Price Expectations, Land Prices and Behavior of Real Estate Enterprises[J]. , 2016, 28(4): 52-61.

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