The 23rd “Theory and Policy” at RUC NADS

Natural Geographical Constraints, Land Use Regulation and China's Housing Supply Elasticity

Speaker：LIU Xiuyan, Director and Professor of Department of International Economics and Trade of School of Economic and Management, Southeast University

Moderator：NIE Huihua, Executive Vice President and Professor of National Academy of Development and Strategy, RUC  

Time：Dec.18, 2018（Tuesday）14:00-15:30

Venue：Meeting Room 916, Chongde Building West Wing (Keyan Building Block A）

Abstract：

Housing supply elasticity is one of the key factors determining the level of housing prices. Is the housing supply in Chinese cities inelastic? What are the key factors affecting the elasticity of housing supply? In order to explore the above problems, this paper constructs a single-center city model including natural geographical constraints, farmland protection constraints and plot ratio regulation. The paper focuses on the impact mechanism of the three factors on housing supply elasticity and then uses digital elevation model data and micro land transaction data, in order to comprehensively measure the natural geo-constraints and plot ratio regulation in urban land development in China. Based on the statistical data of China's cities from 2005 to 2013, the research uses the changes of demand caused by exogenous shocks as an identification strategy to estimate housing supply elasticity. The study found that the overall housing supply in Chinese cities shows a lack of flexibility, while natural geographical constraints and plot ratio regulation are important reasons for the lack of elasticity in housing supply. Further research shows that the larger the population size is, the smaller the housing supply elasticity becomes and the more restrictive by the constraints of natural geography and farmland protection it is. The findings provide a new perspective of interpretation for the typical increase in China's current housing prices, especially the fact that housing prices in high cities remain high. Therefore, the government should adhere to the principle of “different governance for different cities”, appropriately reduce the intensity of plot ratio regulation in land development, and gradually increase the land supply of large cities with low supply elasticity, so as to promote the stable and healthy development of the real estate market.

Speaker Profile：

Liu Xiuyan (1979-) is a male PH.D., professor and doctorate supervisor. He is currently Director of Department of International Economics and Trade of School of Economic and Management, Southeast University. Meanwhile, Liu is one of the youth social science talents in Jiangsu Province, a member of China Regional Science Association and an anonymous reviewer of many famous journals including Economic Research, China Economic Quarterly, Management World, The Journal of World Economy, etc. So far he has published more than 40 papers in many domestic core journals, including Economic Research, Management World, The Journal of World Economy, China Economic Quarterly, Economic Perspectives, Finance & Trade Economics, China & World Economy, etc. Besides, at present Liu is presiding over the research of a key project of National Social Science Fund. He has also presided over one general project and one youth project of National Social Science Fund. Chen has obtained 5 provincial awards such as the first prize of Outstanding Achievement Award of Philosophy and Social Sciences of Jiangsu Province. His main research fields are regional economics and urban economics.