Transcript Slide 1

LAND POLICY
FOR
AFFORDABLE HOUSING:
ZONING ORGANIZING MODEL
Abstract
• A structural model of the residential land market
describing of the demand and the supply
variables in connection with the low income
housing.
• The potential of policy interventions are
assessed to increase the supply of land for lowincome housing
Research Problem
• Residential land affordability as a factor
of housing affordability.
• High rise of land prices in Jordan
reduced homeownership opportunities.
• the need to promote land demand for
the low income housing using a more
precise empirical statement of land sale
and market variables.
• the need for market analysis to adjust
and enhance land subdivision to be
used more effectively as an affordability
measure.
• Despite the massive overall improvement in the
national housing stock and land market, over the
last five years, little is known about meeting the
housing demands of the lower income
households.
• Simple statistics show that low income
households (less than 30% of region median)
have increased by 20% between 2000 and 2005,
while land prices have been driven up by 200%.
Whole regions have become less affordable with
more economic and locative issues related to the
low income settlements.
Research Question
• how can land policy mediate in
the market to increase low-income
access to residential land?
key questions of the research
Questions
1
What empirical evidence can be obtained on the
availability of land for various housing types, especially
for the low-income housing?
2
What market outcomes actually affect land demand for
low income housing? What estimates do sales records
provide?
3
What are the determinants of raw land prices? What
estimates do statistics provide?
4
What is the impact of subdivision into smaller lots on the
land market? To what extent can size be an affordability
criteria?
5
What empirical evidence available to assess policies of
land division and income subsidies serving the low
income?
Objectives
1. To explore land use and economic variables
relating to land market sorted by household
income, land price, zone type and location
of land supplied.
2.
exploring in particular the impact of
subdivision on market outcomes. The
objectives are directed to small lot policies.
Context
• Zoning configured by the market has more
capacity to qualify lower types of residential
land as affordable, in terms of subdivision
standards.
• A market- based allocation and lot size
zoning configured by the user preference.
• Market approaches should be aplied to
production of lower zoning types treating the
low income households in essence as
initiators and respondents to the market
Data Description
• The study area of this research is the main fourteen urban
areas in jordan: Amman, Salt, Zarqa, Rseifa, Madaba,
Irbid, Ramtha, Mafraq, Jarash, Ajloun, Karak, Maan,
Tafeelah and Aqaba.
• The data used is cross sectional sets on land sales and
income conditions for 2005. The selection of variables is
based on the conceptual framework of the workings of the
market outlined in the previous sections.
• Data on income and population, income distribution by
quintile for each study areas come from the Census of
Population and Housing for 2004.
• Parcels of land are also distributed allowing for the
price of land for housing of the lowest quality to be
estimated separately. Parcels are sorted by parcel
characteristics (price, size, location, zoning type).
Land parcels fall into three distinct types (L = {1,..,3}).
The type of land for low income housing the analysis
considers smaller parcels rendered as zone type “D”
and lying mostly in the periphery. The zone type "D"
characterizes low income neighborhoods by small
areas (100-300m) and maximum density or building
ratio of 58%
QD = a + bY + cP + dD
P = a1 + b1S + c1Z
•
•
•
•
•
•
QD : Demand quantiy; number of sales on land parcels
(parcels providing low income housing).
Y : Number of household in an income quartile (low
income households with an annual income
of
2460JD).
P : parcel price per unit area (JD/m²).
D : Number of land partitioning decisions (conducted
on large parcels of land on the periphery
S : Parcel size
Z : Zoning characteristics; design- related restrictions
•
The impact of changes in demand and
supply variables of the residential land
market on the proportion of low-income
households responding to this market.
•
Land demand of the low inome households
is a function of income, price and quantity of
land supplied. The last variable is indicated
by the land divisions of large land parcels
nearby an urban area into smaller parcels.
•
The impact of changes in land use variables
on land prices.
•
Size variation of sites, location, and
residential zoning type, are locally variable
functions of prices.
• the relationship between land demand and
proportion of low income households is
expected to be positive and linear. All the
transactions involve small (maximum of 350
square meters) parcels of land. Thus, a
positive and statistically significant relation
would indicate that low income households
are potential consumers of this type of land.
• The relationship between demand and price is
expected to be negative and linear. If this
parameter estimate is negative, it indicates
that land demand is decreases due to the
increase in the price per square meter. The
reverse holds if this parameter estimate is
positive.
• The relationship between land demand and
quantity of land supplied by land subdivisions
and partitioning- is expected to be positive
and linear. Here, the research looks at large
parcels of land at the periphery of an urban
center in the process of being divided into
smaller parcels. Land divisioning or
partitioning is a land development decision
induced by price, physical characteristics and
public policies. A positive relationship would
indicate that land demand is increased by the
accumulated decisions to divide land.
• In the second equation, the relationship
between land price and parcel area is
expected to be negative and nonlinear. This
indicates that that land value increases at a
decreasing rate as parcel size increases,
Thus price per square meter decreases due
to subdivision also at decreasing rates.
• Expectations concerning zoning are
complicated by the various size of the parcels
included in this study. In general, the least
densely developed the residential land, the
higher the price per parcel. Land which is
residentially zoned (D) tends to be the most
densely developed, and it is hypothesized to
be traded at the lowest price per parcel of the
four types of zoning(A), (B), (C) and
(D)examined in this study.
The progress of themes in research areas towards a focus on subdivision.
Land use planning and development
The project of the poor
Development standards
Land supply
Land value
Land affordability
Subdivision
Land market
Allocation
Demand
Intervention rationale
Neo liberalism
Site and Service
Subdivision
Land policy
Efficiency and equity
Land management
Direct intervention world bank
Learning by doing
Site and service
subdivision
Poverty alleviation
Suitability and acceptability
Affordability standards
subdivision
• The policy demand model is constructed in
the following form
QD = (-208) + ( .02) Y + ( 4.7) P + .3(D)
log P = ( 3.1) –( .8) log S
• Policy Analysis
• 1. Substituting in the price model shows by
dividing a parcel of 500 square meter into a
parcels of 250 square meter the change in price
would be equal to 8 JD/m2 (33.72 jd/m –
15.7jd/m). Holding other variables constant in
the demand equation, such change in price
would cause a 13% increase in the demand for
small parcels.
Policy Model Implication
•
The greater justification for subdivision is
its fundamental character as instrument to
fight against two factors
1. poverty and inequality
2. property concentration.
•
Policies should adopt subdivision on more
than one level
Fig.
• Generally, this analysis concludes that urban
plans do work for the advantage of the low
income. Almost all towns of any size have
plans, varying from simple maps to highly
detailed master plans. Plans are better rooted
in the perception of the urban poor where he
recognizes the most vulnerable places for his
project.
• The analysis regards the Guide planning
(referred to earlier as a technique employed in
smaller cities of Brazil) to be inspirational. the
analysis suggests the following process.
• Designating gross areas,which has the
advantage of not upsetting the working of the
markets by predominant sizes, anticipating
self-enforcing dimensioning, the district may
be is detailed on the plan when the demand in
function and character is clear.
•
Application to larger regions would be
to divide the land into broad
categories that includes critical, and
stable. and then to concentrate mainly
on the critical areas, prioritizing then
the low income share of land as gross
areas, leaving subdivision to be first
sensed by buyer and seller dealing,
detailing may then be refined.
•
•
•
A double action of anticipating market
signals and providing information to the
market.
This process should be able generate
information that may cause re-sizing
subdivision to local conditions Different
detailing in subdivision may also be
appropriate even for some low-income
peripheral areas.
It should be performed rapidly, by a
municipal planning agency which is usually
a level closer to the low income and local
knowledge.
• Information regarding future
subdivision potential can be extracted
from the data.
Policy Analysis and policy making
• In order to investigate the sensitivity of this model a short exercise
was undertaken to compare the sensitivity of the lower income
households to the increase in accumulative decisions to divide land
• Substituting in the price model shows by dividing a parcel of 500
square meter into a parcels of 250 square meter the change in price
would be equal to 8 JD/m2 (33.72 JD/m2 –15.7JD/m2). Holding
other variables constant (at their average values) in the demand
equation, this change in price would cause a 13% increase in the
demand for small parcels.
• An increase in the number of land divisions by 30% (for example,
adding to the national average of 1170) would result in 15%
increase in the demand for small parcels.
• Increasing the number of households in the low income group by 5%
(for example, by income subsidies supporting about 500 households
of the poorest of the low income, or the poverty group), would result
in 2.7% increase in the land demand for small parcels.
•
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•
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Accepting urban planning even in a market-based policy. Urban plans are useful instruments that work
for the advantage of the low income. Almost all towns of any size have plans, varying from simple maps
to highly detailed master plans. Plans are better rooted in the perception of the urban poor where he
recognizes the most vulnerable places for his project.
Designating gross areas, which has the advantage of not upsetting the working of the markets by
predominant sizes, anticipating self-enforcing dimensioning. The district may be is detailed on the plan
when the demand in function and character is clear. Here, the analysis regards the guide planning
(referred to earlier as a technique employed in smaller cities of Brazil) to be inspirational.
Application to larger regions would be to divide the land into broad categories that includes critical, and
stable. And then to concentrate mainly on the critical areas, prioritizing then the low income share of land
as gross areas, leaving subdivision to be first sensed by buyer and seller dealing.
A double action of anticipating market signals and providing information to the market. This should be
performed rapidly, by a municipal planning agency which is usually a level closer to the low income and
local knowledge.
This process should be able generate information that may cause re-sizing subdivision to local
conditions. Different detailing in subdivision may also be appropriate even for some low-income
peripheral areas.
Finally, it will be a matter of for project monitoring to establish the strength and weaknesses of these
policies.
In the context of neo-liberal ideals this process seems to fit, but outlines should be drawn:
Communities which are originally resilient to debt should be helped by the policy to maintain this
character.
The government social role is direct in attacking poverty and supplying the poor with homeownership
• The research model, being based on cross sectional data, allows for
national policy making. Constructing this model to serve on a
municipality level requires it to be based on time series data.
• Conclusion: subdivision is the most important determinant of low
income land demand for the low-income population.
• Policy: Promote land sales for the low-income by subdivisioning
most new and undeveloped land parcels.
•
Policy recommendations: considerations should be given
to creating additional "D" zoned areas since this will continue to be
the preferred style of urban development for many members of the
low income groups. Since a large proportion of land on the urban
periphery has already been zoned "AB" or "C" it may be desirable to
rezone certain of these areas into "D" and "F" or adopting a land
readjustment (downzoning). Consideration also should be and
giving permitting further reduction to plot sizes down to 150m2 , by
putting into effect the legislation that permits such a level of zoning.
•
•
•
•
Conclusion: Low-income land demand is increased by private
decisions to divide land.
Policy: Promote land sales by increasing incentives to facilitate
land divisions ( and real estate properties in general).
Policy recommendations: municipality should adopt land
management measures such as removing or relaxing taxes and
constraints on the process of plotting land.
This would be very effective in the "D" zone where resident land
owners predominate. Thus encouraging land owners to a more
rapid development of their lands, either according to a parcelation
scheme approved by the municipality or by a readjusting scheme.
In the context of neo liberal ideals this
process seems to fit bur outlines should be
drawn
• Communities which are originally resilient to
debt should be helped by the policy to
maintain this character
• The government social role is a direct in
attacking poverty and supplying the poor
with homeownership. information and
coherence
• The Municipality can achieve that by
• Creating additional d zone areas since by this will
continue to be the preferred style of urban
development for many members of the low income
groups. Sinse a large proportion of land on the urban
periphery has already been zoned AB or C it may be
desirable to rezone certain of these areas into DF or
adopting a land readjustment (downzoning)
• Removing or relaxing consstraints ithe process of
plotting land (this would be very effictive in the D
zone where resident land owners predominate). Thus
encouraging land owners to a more rapid b their
lands either according to a parcellation scheme
approved by the municipality .
Low Income Development, Land Related Definitions
•
Land use planning In recent definitions "is a systematic procedure
carried out in order to create a sustainable land development which
meet people's needs and demands. It assesses the physical, socio
economic and institutional potential and constraints, and empowers
people to make decision of resource allocation.“
•
Giving value to the developments or investments
realized by families which, for residential development,
may be achieved by incorporating indicators for clearer
market signals of demand pressure in certain tracts or
locations for certain types of housings. This "first"
reaction to the user demand is the focus of the current
analysis.
•
Land development, which people call the "project", is "the improvement of land
for any purposes regardless of the number of occupants or tenure, coupled with
the division and allocation of land or space for the purpose of urbanization."
• Yet, the project of the urban poor needs
factors of development that goes beyond the
basic zoning. It needs the map to generate
opportunities to affordable plots in the
necessary places; small plots, in terms of size.
• Subdivision comes to the fore front as the
instrument to be employed for adjusting the
physical aspects of the plots to particular and
local conditions. Subdivision should be
equipped with technical information; market
signals of prevailing locational opportunities
and plot physical dimensioning and clustering
that is compatible with low income household
economy.
• the output, which people call "map" rather than plan,
is information open to all, and requires not only the
plan but the very same city, its land development
opportunities and resource allocation, must be
understood and subject to many possible
contributions and criticism of all kinds to suggesting
alternatives or corrections.
• The research would consider this to be the "second"
reaction to the user's demand (proposals). This
process, whether in traditional or more recent
approaches, is in the base of local diversity, and
access to land for the poor should be first
acknowledged here.
• Accordingly, policies for affordable land supply
requires that expansion areas be checked for (a)
sufficiency, (b) diversity and (c) distributional effects
of housing plots, with a stronger idea of demand
(proposals), and a stronger perception of the
essentiality of subdivision in creating differentiality,
Land supply unchecked for these criteria will only
raise the price of land via competition.
• land supply tends to by converting rural land at
the periphery of the existing urban areaSubdivision and private decisions of land partitioning
of these large parcels is usually followed by the
provision of access roads and other service .
• This is the underlying concept; increasing the total
quantity of urban land is the way for the containment
in land values. Then, with a larger supply, policies
for the low income access can use less modifying
techniques and have greater success- once
considered against the background of overall
resource constraints and alternatives
• But, major land problems of insufficiencies are
caused by land supply (availability) being
independent from land demand (allocation) the
reason suggested is the supply is determined
primarily through the planning system while demand
depends upon the housing market
• From the analysis point of view, the problem of
demand and supply mismatch is one of information
rather than duality
• methodologies which have been attempted to
combine the strength of planners and developers
utilizing demographic forecasting with the market
indicators criticized developers "for the lack of
consensus”
• Latest arguments suggest that it is the public sector
which "should be able to obtain, transmit, or evaluate
information more effectively than the private sector".
This analysis, relied on the legal framework related to
the land market in order to obtain information. It
shows that results from this fragmented market, can
be reached.
land supply; the role of planning and subdivision
•
•
•
•
•
1. Plans
2. Urban growth boundaries
3. Zoning restrictions
3. Building Regulations
4. Subdivision
Land value and affordability
Land prices is the present market value of a parcel and it emerge
only when sales take place. The actual land price might
challenge any definition. But the reported land price of more
frequent sales of particular types of land in a certain tract would
offer a conventional and domestic knowledge that may be the
only one available. (Even if the reported "prices" of land are in
fact based on assessments or appraisals, these would normally
be geared to actual land transactions)
Land value and affordability
Land prices is the present market value of a parcel and it
emerge only when sales take place. the reported land price of
more frequent sales of particular types of land in a certain tract
would offer a conventional and domestic knowledge that may
be the only one available. (Even if the reported "prices" of land
are in fact based on assessments or appraisals, these would
normally be geared to actual land transactions)
Land value might be defined as market and capital values are
measure private profit and productivity,but they do not
necessarily reflect social values of resource or output. Social
values may cause significant deviations around (usually above)
the free market values. Many factors: influence land values:
the supply of sites of different types and the demand for such
land, the physical characteristics of the Land it; accessibility,
and its services and development capacity.
• the opportunity cost of land. This might be thought of as the
planning price of land: ".the expected value from the land in its
most likely alternative use", (next to the present, reasonably
predicted alternative)
• Changes in the opportunity cost reflect changes in the profitability
of land owing to changes in preferences, production, technology,
and in the regulatory environment of land use laws, regulations, or
customs.
• The problem lies where land opportunity costs are calculated
excessively as a high proportion of present market value, partly as
a consequence of excessive speculative use of land. And thus
"when government may impose differential taxes, subsidies, In
principle, these measures may indicate what the government
intends to bridge the gap between private and social cost and so
help determine the correct opportunity cost.
• Even where a free market exists, in order for land prices to be
affordable (for any sector), it should generally be treated as no
more than the starting point for the calculation of economic costs.
• land affordability
• a) standard of comparison for the rise in land
price and
• b) differentiating between "high" and "rapid"
increase in land price of measuring changes
in land prices,
• c) The transitional points, at which the
increase of economic value, for any site, is
likely to occur ( as jumps)
• Examining land price change it may be
reasonable to compare urban land prices with
asset prices or with non urban or serviced
land for comparison.
• Since the primary concern about the expense
of urban land arises from the assumption that
the urban poor cannot afford to buy a plot of
land, theoretical discussions suggested that
land prices might be judged by the income of
the poor, while regarding land as one input in
the rising cost of shelter provision or dwelling
rental for the poor, which is the obvious
measure of the material well-being of the
community as a whole.
• This research however would consider the
comparison the income of the poor and the
price of land to be straight forward and
reasonable. For, the economy of the poor
shows that his calculations for building a
small scale shelter, only when the price of
land is paid, is rather incremental.
• if land account for 40-50% the price of a
standardized unit of shelter which, in turn,
should consume a third of the income in order
to be affordable-. The increase in the price of
land will affect this price of shelter but more
than proportionately shown in a comparison
between fixed land input (price) and the
incomes of the poor.
• arguments differentiate between describing
the increase as high or rapid. . A rapid rise in
the price of simply reflects the fact that, over
a time span, it used to have a lower current
income than other assets. And thus makes up
for this lower income
• In the cities of developing countries Some
evidence, suggest that real land values in or
near most urban centers have in fact
continued to rise at a rate providing net
yields that substantially surpasses market
rates for comparable investments.
• Among the possible explanations are: active
land markets and the lack of other forms of
investment, overestimated and excessive
land speculations, lack of adequate
knowledge and rational expectations. In
addition; unexpected turn of events.
• The increase in the economic value of land in and near
urban areas occurs in jumps; different land policies
for affordability has different impact according to the
phase of anticipation.
• the most important is usually the initial transfer from
rural to urban use.
• After the initial change from rural to urban use, the
value of the now urban land will continue to rise, but
more slowly as a result of changing locational
advantages of the plot as towns and cities expand.
• At some later stage, however, there may be another
sharp jump in capital value, brought about by the
addition of urban infrastructure.
• A similar sharp rise in value will then occur in advance
of the change in use, (including those for preparatory
work, various costs of subdivision, the provision of
urban services) .
Land speculation; the role of land policy and subdicision
• Speculation, after all, arises from the weak
enforcement and possible modification of regulations.
• The allocation of use and density, replicated many
times in a zoning and subdivision process, can
become a major force in establishing the pattern of
land values
• subdivision can confirm governments intentions; in
countries anticipation, for example, of a historical
drift toward land reform, the opportunity cost is low,
one might expect a future surplus generated to be
considerably low.
• The Zeus are an interesting answer were many
Brazilian jurisdictions implemented an instrument
that facilitates the regularization of existing informal
settlements, these zones effectively lower prices; for
they generate market expectations in relation to land
reform residential low income lands
Poverty Reduction
• Definitions
Poverty mirrors assets (human, physical, natural, social,
financial, and intellectual capital).
Poverty mirrors assets (human, physical, natural, social,
financial, and intellectual capital).
• The concept of a house
the issue is not so much of affordability as of suitability and
acceptability of the investment
Land use Policy and land markets
• A Land use policy is essentially "an expression of the
government perception of the direction to be taken on major
issues related to land use and the proposed allocation of the
national land resources over a fixed period of time. Land policy
has a production and a conservation component
• The objectives generally put forward are: Efficiency and Equity
while attempting to stimulate investments and land
development. It is an important reality to be recognized: the
context of enabling markets to work is different from that of
moving the whole society towards Neo liberal ideals of
decentralization and deregulation. These may result in different
evaluations of policies.
• Although this section draws heavily from the World
Bank approaches, which, for the past three decades,
has been the leading sector in low income housing in
the developing countries• World Bank approaches are both creative and
operative, especially the Learning by Doing. And its
methodologies of reform really reaches grassroots.
Yet, this analysis would rather add to short messages
in some writings- pointing that the World Bank may
criticize a successful policy (if not in the heart of
capitalism) such as policies enhancing the realization,
on the long run, of the wider role of government in
land trading for general social purposes.
• the consequences of land market policy
interventions as measures which generate the
required increase in land supply and :
(1) decreasing lot sizes,
(2) increasing land partitioning incentives,
• Research results suggest that a very large
amount of residential land can be provided
through increased reliance upon well-targeted
smaller- lot policies.
• rationale for intervention includes along with traditional
reasons for the provision of public goods and signaling or
dealing with externalities or spillover effect on nearby
property which are particularly prevalent for the urban
economy. Other reasons include imperfect information as
foresight necessary to achieve economies of scale are
more effectively obtained and transmitted by the
government, market power gained by the suppliers of
urban services which is very inelastic, time lag, uncertainty
which leads to underinvestment, and minimum standards
realization by the community.
• The need for land for low income housing is one of the
immediate reasons for intervention; individual owners and
users have little incentive to take account of it, the use of
land by the highest bidder may not be considered the most
socially advantageous.
• On the other hand, suppression of land markets tends to
paralyze private development and to remove signals that
are useful urban opportunities for the efficient allocation of
land
• The latest development of theoretical work have
predicted on liberalization, deregulation, and
privatization. So there has been a revival in the
laissez-faire approach.
• Nevertheless, the common rule that private land
property and the real estate benefits, have limits,
derived from the concept of the social function of
the property (also global).
The relevanceof neo liberalism to low income housing
•
Concepts of neo liberal in World Bank guidelines may be recognized as follow:
• The concept affordability-cost recoveryreplicability.
• Decentralization and privatization: "will
modify how and at what levels informed
decisions will be taken.
• Deregulation
• Overall the according to the neo liberalist
reasoning should be recognized, subsidized
housing ,for example, evaluated as induces
an enlarged rural-urban, migration, The
question of providing loans at below market
rates of, from higher-interest interest raises
wider issues. Commercial finance (Indian
housing experience) has come under
increasing criticism from the World' Bank, as
inhibits flows of funds to housing and it
distorts and suppresses patterns of saving.
Policy interventions
• Intervention usually takes three broad
categories planning regulations, direct
government investments and fiscal
measures of subsidies and taxation a)
• Land management improvements
Example: Land Readjustment
• direct public investment
Example: land banking
Example : Site-and-Service
The DEMAND MODEL
methodology
• The land market is fundamentally described
by household choices of location and lot
size. The outcomes, as in all economics,
arises from the interaction of demand (of
household) and supply (of land parcel).
Households are characterized by their
income and preferences while land supply is
characterized by quantity, location and lot
characteristics. Household preferences can
be represented by the price each household
is willing to pay for each type.
• A research of the low-income household
demand would further complicate the
characterization of equilibrium by putting the
word prefers in quotations.
• A useful approach, in this case is assessing
the relative importance of the demand
variables using models in the structural form1;
that is, the basic form in which endogenous
variables are allowed to be determined by one
another. This form is more intuitive and
expressive of the pathways different variables
influence land demand and land price.
• Regression is used to estimate structural
coefficients of the demand and price
determinants. Regression is conducted on
cross sectional income and land sales data for
2005 for 14 main urban centers in Jordan.
• These centers vary significantly in respect to
urban growth rates while having fixed
exogenous variables (variables determined
outside the model).
• Disagregation is conducted In order to make the
approach more appropriate for the research purpose,
income quartiles are distributed in the demand
function, allowing for land demand to be estimated
separately for the low income group. Households fall
into four income classes (h = {1,..,4}). The low-income
is defined as the quartile class right above the
household poverty threshold in Jordan of 2468 JD per
year. Low income population have the mean earnings
of 3035 (which is differentiated slightly through the
urban areas) and account for 30% of the total
population. Variables of income are substituted into
the demand equation to report the most important
changes that may affect the low income households
bidding for land.
• The analysis describes the workings of the urban land
market as interactions in which these households of
various income levels choose among these distinct
residential land types
• The analysis of land parcels
makes two
methodological contributions: internalizing the zone
type as endogenous factor and incorporating a land
supply which is spatially on the periphery.
• The analysis of land parcels
makes two
methodological contributions: internalizing the zone
type as endogenous factor and incorporating a land
supply which is spatially on the periphery.
• Information on lot size and price are collected from
sales records for 2005 supplied by the Department of
Land and Survey.
• Sales of real estates were filtered to establish a
sample frame for sales on residential raw land
accounting for 64680 sales in the 14 study areas.
This frame was compared to assessment cards to
establish a list of residential land within the
development boundaries (rendered into residential
zone types) accounting for 16220 sales. This frame
was used to compute mean prices and lot sizes were
computed for each type.
The total number of residential parcel sales
and selected samples
Study area
Total sales
Sample
1
Amman
10770
250
2
Salt
620
50
3
Zarqa
1230
80
4
Rusaifa
390
25
5
Madaba
130
15
6
Irbid
770
50
Study area
Total sales
Sample
7
Ramta
270
15
8
Mafraq
780
40
9
Jarash
130
15
10
Ajloun
110
15
11
Karak
130
17
12
Tafeeleh
160
16
13
Maan
470
30
14
Aqaba
350
20
• Information on lot location and characteristic
come from GIS parcel data supplied by the
web site:
www.dls.gov.jo.
• Systematic random sampling was used to
select 700 land parcels accounting for 5% of
the sales on residential raw land within
development.
This
sample
is
also
representative of land basins according to
number of sales. The web site was consulted
for this sample to relate lot location and
characteristics to price.
• Residential land demand in general is the result of
private household income and preferences and
public land use planning and policies.
•
Thus the determinants of residential demand, or the
proportion of household bidding for land, will depend
on other variables such as household formation
growth, household income and distribution, lot price
which is dependent on lot area and zoning type, and
the total of public and private subdivision decisions
and exogenously determined land polices and
national data
• National data,such as interest rates, stocks, and
asset values are assumed fixed across the study
areas or slightly differentiated as expressed by
consumer retail price change rate..
Table 3.1: Summary Statistics for 14 urban centers in Jordan
Std. Dev.
Min
Max
Mean
Number of house holds
71150.5
100904.8
13264
380285
Average household income
5116.1
678
4159
6570
Number of low income households
17581.2
22078.4
3541
79619
Average Assessed Lot Price (JD/m2)
17.7
21.5
2.5
81
Residential land lot sales
636
931
142
3680
Percent of small residential lots (max. 500 m2)
.2
.08
.1
.39
Private land lot divisions
1171
1611
95
6530
• Total and low income households
400000
350000
300000
250000
hh no
200000
low incom hhs
150000
100000
50000
0
amn slt
zrq
rsf
mdb rbd
rmt
mfr
jsh
ajl
krk
tfl
man aqb
• Land sales and land divisions
6000
5000
4000
3000
2000
1000
0
1
2
3
4
5
6
7
no of small-lot sales
8
9
10
11
no of land divistion
12
13
14
0.45
0.4
0.35
0.3
0.25
0.2
Series1
0.15
0.1
0.05
0
amn slt
zrq
rsf
mdb rbd
rmt
mfr
jsh
ajl
krk
tfl
man
aqb
DEMAND ELASTICITIES
Table 3.13: Demand elasticities
Elasticities
.45
Low income hhs
.23
Price
.47
Division
Demand variables are within the range of inelastic.
• Q : Demand quantity; number of sales of land
parcels (small parcels and D zone type).
• Y : Number of household in an income
quartile (low income households with an
annual income of 2460JD).
• P : Mean parcel price per unit (JD/m²).
• D : Number of land subdivisions (conducted
on large parcels of land on the periphery
• S : Parcel size (of land sales conducted on
parcels of land on the periphery).
• Z : Zoning type of residential land "D".
• The result indicates that changes in land
demand of type C (assumed to be of interest
to middle income housing investments)
affect the demand for land of the lower
income housing. Increases in demand for
housing of the highest quality will not affect
the low income demand.
• 2. An increase in the number of land
divisions by 30% (for example adding to
the national average of 1170) would result
in 15% increase in the demand for small
parcels.
• 3. Increasing the number of households in
the low income group by 5% (for example
by income subsidies supporting the
poorest of the low income , or the poverty
group, would result in 2.7% increase in the
land demand for small parcels
• The disagdregated model for the first (main) equation uses the
number of household, mean income of four household types
(treatment of the income distribution) and mean price for three
residential land types ( parcels of land sorted by price, zoning type)
for each observed area. Given a specific income group x The model
can express their demands for land type y as such:
•
•
•
•
•
• QD(y) = a + bY(x ) + b P(y) + dD + €
QD(y) : Demand quantity; number of sales of land parcels (small
parcels and D zone type).
Y (x) : Number of household in an income quartile (low income
households with an annual income of 2460JD).
P(y) : Mean parcel price per unit (JD/m²).
D
: Number of land divisions (conducted on large parcels of
land on the periphery
€
: Disturbance factor
• Three versions of the demand model are estimated:
Model 1 with number of low income household;
• Model 2 with price added and no subdivision variable ;
Model 3 with this subdivision variable added to Model 2;
• Model 1 is included as a base point for measuring the
effects of the addition of the variables. As each
independent was entered in turn into the regression
equation. The most significant variable added would be
the one which made which made the greatest reduction
in the error of squares the variable that has the highest
partial correlations with demand
• The parameter estimates in Model 1 are positive and
statistically significant. Thus, indicating as expected
in the hypothesis that low income households are
potential consumers of this type of land; small lots of
maximum 350 square meter or of type (D) in
peripherical areas .
• The parameter estimate are improved by adding the
price variable in Model The price parameter is positive
as found likewise in other demand models. land
demand increase due to increase in price may
indicate anticipation, or speculations of rapid growth
in price.
• All of the parameter estimates are statistically
significant in the final Model 3 contrasted by adding
subdivision supply factor and price has a stronger
magnitude. This shows That the supply factor refines
the income and price data in the demand model.
• The relationship between land demand
and quantity of land supplied by is
further tested singly and with the
addition of price factor
• Results of positive and statistically
significant parameters indicates that
land demand is increased by land
subdivisions and partitioning which
occurs in the periphery. This result is
consistent with the hypothesis
The Submodel: value/size
• In the second equation, the relationship between
land price and parcel area is suggested to be
negative and loglinear. This indicates that that land
value increases at a decreasing rate as parcel size
increase
P = a1 - log b1S + c1Z
• P
•
•
S
Z
: parcel price per unit (JD/m²).
: Parcel size
: Zoning type
• The coefficient of the area variable is as expected in
the hypothesis, negative This implies that land price
per unit area increases due to subdivision at
increases at increasing rates. The total price may
thus be profitable for the land owner and affordable
for the low income who is able to purchase smaller
parcels. this has the potential of providing highly
useful information to land developers regarding
market trends in the profitability of the subdivision of
a large tract of land into smaller parcels
• measuring the effect of zoning is crude in most of the
analysis substitutions. it is perhaps made complex
by the large tracts of land included in the sample.
These tracts, at the edge of an urban area may be
zoned residential, be in agricultural use and in
anticipation for infrastructure. Thus have their price
driven by many factors. Moreover, large parcels also
anticipate rezoning which is highly likely when the
parcels are subdivided. It cannot be predicted how
the parcels in this study will be rezoned. Therefore,
the zoning variable may not capture the true, ultimate
land uses when the land is subdivided. A better
enforcement of the plans while keeping subdivision
flexible to buyer seller deals may lead to the
refinement of such models
MODEL 4:
QD =42 + 3.1 (D)
2000 = 42 + 3.1 D
In order to investigate the sensitivity of this mode a short exercise
was undertaken to compare the sennsitivity of the lower income
households to the increase in accumelative decisions to devide land
Assuming that the housing demand for the city of Irbid for 2008
=6500 unit for tha year 2008, the lower income may account for
about 2000 unit which by applying the model requires the number of
devisions to be about 650 devision. The analysis finds that under
thid scenario the increase in the devisions required is 50% more
than the year 2005. municipality may achieve that by land
management
• There are many who believe that the prime problem
of the low income households market is the low
income then a subsidy policy is the most efficient
way to reduce the low income crisis.
• A major policy question is whether subsidies should
be concentrated
• at the building level ,
• at the households level or
• at a geographical level( i.e census tracts with high
number of low income households.
•
to determine the relative merit for each policy we
need to analyze the impact of those subsidies on
the long term behavior and quality of life of
households
• In order to understand the economies of
housing in low income areas we first need a
substantial amount of research on the
dynamics of low income households,
buildings and neighborhood so that public
policy interventions being proposed can be
put into context of a dynamic market model
with this macro context in mind.
• Poverty still existed but its settings has
changed Situations of ten years ago has
transformed when the economy seemed static
and social structure paralyzed remedy could
be advocated in terms of single solutions.
• Additional study is needed; for example
there are very few facts about the
distribution of urban land ownership among
income groups
• Unfortunately, traditional sets do not include
information regarding buyers and sellers.
Data sets of housing sales with buyer and
seller characteristics, such as income, family
size, occupation of head of household, age
of children, etc., should be gathered for
subsequent analysis in order to better
understand the role of buyer characteristics
• So far , there have been no carefully
designed statistical studies of the price of
land that would shed light on the various
measures discussed above. Nor is this
surprising the difficulties of definition,
comparability, and sequence. Unfortunately,
there is no corresponding corpus of
accepted theory, of analysis of experience,
or usually even of minimally adequate
statistical material, against which to test the
possibilities for improving conditions
• this research contributes towards the first
step for the development of such standards.
Using the first digital dataset and generating
replicable findings that measures land
patterns and prices, thus allowing for
aggregation to the local and national levels.
Over time, regular reporting should help
develop time series.