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Frontiers of Economics in China

ISSN 1673-3444

ISSN 1673-3568(Online)

CN 11-5744/F

Postal Subscription Code 80-978

Front. Econ. China    2010, Vol. 5 Issue (1) : 25-51    https://doi.org/10.1007/s11459-010-0002-7
Research articles |
China’s House Price: Affected by Economic Fundamentals or Real Estate Policy?
Huayi Yu ,
School of Economics, Renmin University of China, Beijing 100872, China;
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Abstract Many theory and empirical literature conclude that house price can reflect economic fundamentals in the long-term. However, by using China’s panel data of 35 main cities stretching from 1998 to 2007, we find that there is no stable relationship between house price and economic fundamentals. House price has deviated upward from the economic fundamentals since government started macro-control of the real estate market. We consider that the mechanism between the house price and economic fundamentals is distorted by China’s real estate policy, especially its land policy. Meanwhile the policy itself is an important factor in explaining the changes of China’s house price. Then we estimate the dynamic panel data model on house price and the variables which are controlled by real estate policy. The result shows: land supply has negative effects on house price; financial mortgages for real estate have positive effects on house price; and the area of housing sold and the area of vacant housing, which reflects the supply and demand of the housing market, has negative effects on house price. We also find some differences in house price influence factor between eastern and mid-western cities. Finally, we propose policy suggestions according to the empirical results.
Keywords house price      economic fundamental      real estate policy      dynamic panel data model      
Issue Date: 05 March 2010
 Cite this article:   
Huayi Yu. China’s House Price: Affected by Economic Fundamentals or Real Estate Policy?[J]. Front. Econ. China, 2010, 5(1): 25-51.
 URL:  
http://academic.hep.com.cn/fec/EN/10.1007/s11459-010-0002-7
http://academic.hep.com.cn/fec/EN/Y2010/V5/I1/25
[1] Jinhai Yan , Lei Feng , Helen X. H. Bao, . House Price Dynamics: Evidence from Beijing[J]. Front. Econ. China, 2010, 5(1): 52-68.
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