What role does air pollution play in the effect of land use structure on housing prices? Empirical evidence from 30 cities in China

Land use and the housing market are important driving forces of economic growth in China. These two factors are also closely associated with people’s daily lives. The land fiscal policy in China and the pursuit of economic growth of local governments have resulted in irrational land use structures in most Chinese cities since the reform of the tax-sharing system in 1994. The high proportion of industrial land supply and low proportion of residential land supply has led to an increase in housing price and an unneglectable decrease in air quality, influencing people’s living quality to some extent. Thus, adjusting the land use structure is necessary to achieve sustainable growth. The data of 30 cities in China from 2009 to 2017 and the fixed effects model are used in this paper to investigate the in-depth effect of land use structure on housing prices and air quality. Special importance has been attached to the influence of air pollution in the research framework, which has been overlooked by existing studies. The results indicate that air pollution negatively affects housing price and shows an unneglectable mediating effect in the relationship between land use structure and housing price. The empirical results and implications of this study can help governments optimize land use structure to achieve a balance between economic growth and people’s living quality.