Impact of Detailed Regulations for Land Use on Land Prices

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Section1)Creation of DatabaseWe created a database of Land Prices (1982,87,90,91,92) in the 23 Tokyo wards based on figures obtained from the "Koujikakaku" statistics, released by the National Land Agency, and the "Kijunchika" data given by the Tokyo Metropoitan Government..Furthermore, we produced an "adjusted" database based on the attributes of each property, taking into account qualities such as land use (regulation/actual), building volume (regulation/actual), front road width, distance to the nearest station, etc.Section2)Developing Land Price Model and EstimationWe developed two land price models ; the net present value (NPV) model and the hedonic approach model.The accuracy of the latter model was enhanced by establishing standard parameters based on various control groups, primarily those which make similar use of land assets.In addition, a comparison of the two models was conducted to determine which provided the most accurate data, and based on such, we were able to make a quantitative estimate on the impact on land prices resulting from the additional regulations.Section3)ConclusionFrom the aforementioned estimates, we found that the detailed regulations legistlated in the Urban Planning Act and Construction Act (revised in 1992) would have a negative impact on land prices in Tokyo.In view of such, instead of off-setting the decrease in land value with monetary compensation for landowners, we concluded that it is more important for governement to develop policies which would encourage efficient use of land within the limits of the revised Acts.