Land financialisation and housing prices: evidence from China

The issue of land financialisation has received considerable critical attention, with the literature focusing on the definition and process of land financialisation and its contribution to urban development. This paper draws upon the capitalist spatial production theory to explore how the ongoing financialisation process in the land market is related to the housing market. After controlling for observed city characteristics and unobserved city and year fixed effects, we find a positive correlation between land financialisation and housing prices. Furthermore, our results suggest that this positive effect is strengthened in tier-1 cities and when land transfer is fully marketised, but weakened when more affordable housing is available. Overall, this study contributes to the literature on land financialisation and housing prices by critically discussing the consequences of land financialisation on housing prices, providing new insights into the reasons for soaring housing prices, and enriching the knowledge of urban governance.