A Research Of Relationship Between Land Price And Housing Price Based On Panel Data Model

As the continuing rise in housing prices and government's revenue from lands auction,the relationship between housing prices and land prices has increasingly become a hot topic.However, government administration bodies, academics, industry practitioners have different understanding on the relationship between housing prices and land prices, some of them are even opposite.This article intend to help the people to understand the relationship between the two prices through quantitative analysis.This article will pay more attention to the endogenous relationship between housing prices and land prices than most of the other researches. This article will not only build an independent regression equation model of housing prices and land prices based on panel data,but also simultaneous equations model based on panel data. Moreover, the market structures and competition conditions of land and the real estate markets are different among different regions. So, this article will divide the country into three regions:the eastern, central and western region, the relationship between land prices and housing prices of three regions will been study separately.The choice of variables which affect housing and land prices have been fully taken into account during the modeling process. The selection of these variables is mainly based on the real estate appraisal theory and the 3 variable selection principles. 13 variables are chosen to enter the analysis models. The data is collected from the time span 2000 to 2007, covering 21 key cities across the country.Each model is analyzed by EViews. The regression results of both independent equation regression model and simultaneous equations model in national level have shown that there is a two-way positive correlation between the housing prices and land prices. The interaction showed by the simultaneous equations model is slightly smaller than the independent equation. The regional level simultaneous equations models show that there is a two-way positive correlation between the housing prices and land prices in the eastern and western cities. But, the central cities'simultaneous equations model shows that the impact of housing prices on land prices is not significant.Although the regression result shows that the impact of land prices on housing prices is significant, the impact is relatively weak.