The Determinants of Urban Housing Prices in China (2010-2015)

This paper investiges the determinants of Chinese urban housing prices, which is divided into three subproblems: What is the Chinese housing systems and the regulation policies for Chinese real estate market? Due to geographical, demographic and Adminstrational Ranking heterogeneities, what are the determinants of urban housing prices? Do the control policies from central governments have the effects of stabilize Chinese housing prices During the five years between 2010 and 2015? This paper answers these questions from three perspectives: Policies reviews, modeling procedures and empirical analysis. First we review the Chinese housing systems and the regulation policies for Chinese real estate market, and analysis the empirical data of Floating Population Survey by Nankai University and Tianjin Academy of Social Sciences (2013). We find that the Chinese housing systems exist problems such as rapid growth, complex mechanism, and management defect, etc. The solutions for these problems mentioned above are collecting more detail data, accomplishing the low-rent housing and public housing combination, and cancelling the limit of Hukou system. We also find the differences of central government housing price control methods for different subjects: central government may prefer to use land control and public housing construction requirements for local governments; use monetary and tax policies and hukou restrictions for individuals; use financial limit for firms which is relatively limited effects. Then we discuss the mechanism of local government-firm cooperative markets due to the difference of the urban administrative level system and settle down policies. Second we set a model which is a local government-firm cooperative market, and we discover that if individuals perchase houses for principle residence, then the rise of down payment, the ratio of down payment, and mortgage rate will decline individuals’ incentives to perchase houses; if individuals perchase for investment purposes, then the yields of other capital markets will inhibit the perchasing incentives in addition to the effects which are the same as for principle residence. And the inflation of housing hedonic prices indcies is negative related to city budget revenue, city hedonic price and city available land area, and positive related to individual down payment, monthly mortgage payment, and the trading condition of housing market. Finally we use CREIS 2010 data to analysis the regional heterogeneities of housing prices of 96 cities in China, which we develop a new method deviding the mainland China area into regional cities/non-regional cities according to China urban systems, and 3 regions according to geographical, demographic and economic heterogeneities: South-East-Coastal (S.E.C.) Cities/Non-S.E.C. Cities; North-Coatsal & South-Inland (N.C.&S.I.) Cities/Non-N.C.&S.I. Cities, and North-Inland-Cities (N.I.C.)/ Non-N.I.C. Cities. We made comparative analysis and find that City residents’ income, educational factors, constructal rate for downtown area can better explain the heterogeneities of Chinese cities housing prices. We also use VAR methods and time series data of 5 sampled cities to analysis the housing prices interventive effectiveness of central governments, considering the deposit-reserve ratio (RRR), mortagage rates, and the purchase and credit limitation. Then we get the conclusion that the exist monetary policies and the purchase and credit limitation have little impacts on housing prices, and it’s hard for central government to use a universal control strategy to adjust the nationwide housing market.