Changes in the distribution of land prices in urban China during 2007–2012 *

• We examine the changes in land prices in urban China between 2007 and 2012.
• Land prices are analyzed using quantile regression and decomposition methods.
• Price gaps are decomposed into a composition effect and a coefficient effect.
• The two effects vary with the part of the price distribution and differ by land types.

This paper examines the changes in the prices of land parcels in urban China between 2007 and 2012. The average land price in 2012 is found to be 57%, 24% and 41% higher than that in 2007 for residential, industrial and commercial land parcels, respectively. However, this price gap is not uniform throughout the price distribution of each type of land. Using decomposition methods, we disentangle the distributional land price differentials between 2007 and 2012 into a composition effect attributable to the varying land characteristics and a coefficient effect due to changes in the gradients on the underlying land price function. We show that the contributions of the composition effect and the coefficient effect to raw price gaps vary with the part of the price distribution and also differ by the type of land.