Divergence of Urban Function and Its Influences on Urban Land Prices: Evidence from Cities in the Yangtze River Economic Belt in China

Abstract

China's urban land price has experienced a long-term increase that has been accompanied by urbanization. This paper will analyze the divergence of urban function between cities in the Yangtze River Economic Belt from 2009 to 2016 and will explore the effect of this on the urban land price. The results show that there is a significant divergence in urban function between cities, Shanghai, China, leads all the cities, and the central cities have a significantly higher urban function than the other cities. From the demand perspective, residential and commercial land prices are significantly influenced by gross domestic product (GDP) per capita, and the latter is determined by the size of the population. From the supply perspective, the residential land price is determined by government and transport functions and other functions are open, with the sum of coefficients even larger than that of the demand side. The commercial land price is driven significantly by urban government and transport functions in fixed effect regression (FE) and two stage least square regression (2SLS). The estimation of generalized method of moments (GMM) shows that the producer servicing function has a significant influence on the commercial land price and the effect of government function is not significant. The public service function does not have any positive influence on both types of land prices. Land prices were not proved to be significantly influenced by land supply and the coefficients in the GMM were statistically significant. This could provide a basis for local governments to formulate city-specific land policies.