Competitive Intensity, Developer Expectation, and Land Price: Evidence from Hangzhou, China

Abstract

The formation mechanism of urban land prices in China is extremely complicated when local governments monopolize the land supply and land tender, as well as the listing and auction system. In this paper, a land hedonic price model is constructed from the aspects of land features, market competitive intensity, and price expectations of developers. Land bidding data in the residential land market from 28 to 214 in Hangzhou, China, are adopted. Results show that in addition to the plot characteristics, the market competitive intensity and the price expectation of developers play important roles in the formation of land prices. The index of land transaction method, number of bidders, and times of auction can reflect the competitive intensity in the land market and significantly positively impact land prices. The surrounding housing prices before land bidding has an expected effect on the land price, and the expected effect of developers presents a certain law in time and space. The results of this study can offer governments with a basis for formulating relevant policies and provide developers with guidance in making decisions on land auctions.