why there is a sudden hike in the price of lands.....is this good for economy?????

Answer 1

just another way for them to take more of your money.

Answer 2

The price of land is subject to the speculation boom and bust cycle, or rather, is the cause of the boom and bust cycle found in the economy for reasons first explained by Henry George. See my references.

George observed that as a society progressed and technology became better, the rental value of land increased. He further noted that the value of urban land was far more valuable then any other land. Take for example today, where a single parcel of land on 42nd street in NYC sold for money then all of the lands north of the Mohawk river combined (north of Albany). The problem isn't the value of land, indeed, valuable land implies very productive land, such as urban land for example where a single parcel can house or provide work for many thousands of people. The problem is that people can purchase the land and withhold this land from production.

As you might know, as you reduce the overall supply of something, suppliers will then demand more for their product, in this case productive land. So, let's say a speculator buys land where the city is expanding into, or where the speculator believes the city will expand. No one can use that land until the speculator sells the land. The amount of tax on land in the United States is trivial (we have the property tax, which is a hybrid tax of capital and land and the majority of the tax falls on buildings).

The city then needs to expand even beyond that land, which is not being use. This is called checkerboard development or hopscotch development.

If you walk around any urban city, you can usually find the same thing, even in downtown Manhattan. parking lots, boarded up buildings, and fenced off lots. Flat parking lots are simply holding areas for future development. A speculator is holding that land, waiting for some entrepreneur to purchase this land. Since their is no maintenance involved in owning a flat parking lot, or a fenced off lot, the speculator will hold the land as long as he or she wants. In the mean time, everyone needs to walk / drive further work. The building which could have been built, would have provided jobs, and housing for people.

If you notice a large hike in the price of land values, this will be followed by speculators gobbling up land and withholding it from production. You will notice fewer building permits and less development.

Answer 3

The real estate boom is mainly in cities. Because we spend lots and lots of money in developing facilities in cities which attracts more and more people. Land is the only thing that is being created any more. Interested lobbies ensure that things go on like this and the vicious circle continues. If any one with little sense can understand that as long villages and small towns remain as they are to day, it is not possible to stop the migration of people from there. What we should do is, along with developing infrastructure in cities the efforts to de-congest them by shifting activities to smaller towns which also can develop. With modern telecommunication technology many of the Govt.. departments can be shifted to small towns where required facilities can be developed. It will be an input for growth of that new area. But, well, who cares.

Answer 4

It is because of the gap between supply and demand.
Land supply is limited on earth from the origin of earth and it can not increase. that is why it is called real estate.
purchase power of some segment of people has been raising steadily and hence the price increase.
Investment in land proves to be a worthwhile proposition and hence most of the people buy land for investment purpose rather than to build a house.

Answer 5

Are you from Hyderabad?If so you would have known better.IT boom,Sensex hype, privatisation, inflow of multinational companies and other various reasons.Keep apart the economy ;land-owners are highest benefactors and landless are worst sufferers.If we refer Malthusian's theory of population, "population will grow,but land remain the same". Any-how the development is not good for the region.It is just another inflation.There is no wonder if the prices drop suddenly due to political reasons.

Answer 6

yes it is good . it is stop the buyers . so agriculture will develope.