Quantitative Study on the Influence of Capacity Density on Land Price of Urban Residential Land
容积率对城市住宅用地交易价格影响的定量研究

Much attention is paid by the public to rising house prices. Land price is also of concern, as it is an important part of house construction costs. In order to control the increase in house and land prices, the government has promulgated many policies involving finance and land, but the effects were limited. As an important index for controlling land use, capacity density imposed on land price is significant in theory, but in fact, land price is an ill-defined variable, with unknown extent and mode. Thus, the suggestion by some scholars that the use of capacity density as a tool causes land market distortions may be unreasonable to some extent. For analyzing the influence of capacity density on residential land market prices, and calculating the extent of this influence quantitatively, this paper sets the theoretical relationship between capacity density and housing cost as a starting point. We analyzed the degree of capacity density imposed on residential land market prices, using 132 data points on residential land in urban Nanjing traded on the open market from 2005 to end-October 2007. We then used 33 cases in the Jiangning district of Nanjing to validate the results. The result confirms that by combining the method of comparison with OLS, not only were models made more effective, but also the shortcoming of OLS was overcome. In order to prove the importance of location to residential land price, before quantitative analysis, we analyzed the effect of location characteristics on unit land price and floor_value. The results show that the unit land price and floor_value are reduced by 235.29 Yuan per square meter and 120.45 Yuan per square meter for every increase of 1 km in distance to the city centre. The main conclusions indicate that if the land market functions well and when controlled for location, when capacity density changes 1%, the unit price of residential land changes 0.93%. Controlling for location means that the flexibility of land unit price to capacity density is much more stable. Therefore, without considering the influence of other factors, it should be effective for government to control the unit price of residential land by regulating capacity density. Also, capacity density imposes almost no effect on floor_value, and the stability of floor_value is much higher. Therefore, floor_value is more suitable for monitoring the index of land price.