Land Price

In: Business and Management

Submitted By wanyanyinchen
Words 2916
Pages 12
Introduction

Nowadays house price is becoming increasingly important, as residents should take the house price into consideration when they plan to buy a house and policymakers should make regulations on real estate market based on house price. Therefore, the determinants of house price are becoming increasingly important. However, some misunderstandings still exist,such as the real relationship between house price and land price. The author will elaborate on the relationship mentioned above from the following two aspects.

From the aspect of microeconomics, due to some reasons like changing jobs to other cities or deciding to change the living environment, people may buy a new house to start their new lives. Some individuals like to take convenience and quality of environment into consideration, and they may prefer some more comfortable places that have a good public transport service or short distance to CBD (Central Business District). According to the study of the relationship between New York vacant land price and location by Atack (1998, pp.151-172), the author concludes that the distance from city hall and land price have an inverse relationship. Thus, if they want to choose a place that may provide many conveniences, they cannot probably afford the house because of the high price of land. Then they may be always likely to regard land price as a sole determinant as land and house have a strong relationship regardless of other factors. Therefore, a concept may be shaped in their minds that the higher land price is, the higher the house price may be.

Likewise, from the perspective of the macroeconomics, some governments may take some measures to lower land price in order to lower real estate price. For instance, the Chinese government released a document to change the land regulation in order to contain the increasingly high land prices as the real…...

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