There is a relationship between the land/house rent price and urban spatial structures" explain it.
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Answer:
Economic fundamentals are recognized as determining factors for housing and land prices on the city level, but the relationship between housing price and land price has been disputed. In this paper, a simultaneous-equations model is developed to explore the interaction between housing price and land price. This model uses urban land price and housing price as endogenous variables and five factors for land price and seven factors for housing price as exogenous variables. By using sample data of 21 provincial cities in China from 2000 to 2005, the model is estimated by using the two-stage least-squares method. Housing price and land price have an endogenous interrelationship, and as a whole, housing price has greater influence on land price. Per capita disposable income is not only an important factor for land price but also has a direct impact on housing price. Lagged house price has the highest degree of influence on housing price, which implies that increased house price is the expected effect of housing price. The model is effective and reasonable, and it can provide a basis for relevant government departments to establish related policies.
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