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Can Land Supply Growth Restrain the Housing Price Effectively——Quasi-experimental Research on “Turning Counties into Districts”

【Authors】
ZHANG Qingyuan, SU Guocan & LIANG Ruobing
【WorkUnit】
Xiamen University, 361005
【Abstract】

China has introduced a lot of control policies to curb the excessively rapid rises of house prices in key cities in recent years. The land regulation on the supply side has been the focus recently. Although many scholars care about the relationship between land supply and housing price, the results are always inconsistent or even opposite due to the existence of strong endogeneity. This paper firstly establishes a static partial equilibrium model to explore the influence mechanism of land regulation on housing price. To avoid endogeneity, we utilize the policy experiment of “turning counties into districts” in 2000—2013 in China and apply the PSM-DID method to study the effect of land supply on housing prices. The results show that the expansion of land supply has helped to bring down the housing prices, and it is still applicable even though we take into account that urbanization could lead to a rise in housing demand. Therefore, expanding the land supply scale to alleviate the contradiction between supply and demand is an effective means to regulate the housing price in core cities of China.

JEL:O20, P41, R31

【KeyWords】
Land Supply, Housing Price, Turning Counties into Districts