What is the difference between Land Value and Land Price?
Land Price is the accumulated capitalisation of economic rent. It’s what the market pays in a marketplace where land speculation is encouraged and title is bought in a one-off transaction (as per at auction). Land value is the actual rental value of a site ie what can be physically earnt from that location. McDonald’s is the world’s 2nd biggest landowner. They are renowned for ‘doing the sums’ before committing to a future store and buying a piece of land. They hire statisticians to count the number of cars that pass by the location. Using their statistical models, they calculate for example, that if 10,000 cars pass each day with a likelihood of 200 potential customers spending $8 each, the site is worth $11,648,000 ($1600 x 7 days x 52 weeks x 20 years). They will refuse to pay above that market price because they know they can’t earn enough to pay the mortgage. Under our system, they would refuse to pay more than $582,400 (1600 x 7 x 52 weeks) for a yearly site rental because they k
