A Study On Influence Factors Of The Price Of Real Estate

Real estate industry has become a pillar industry in national economy and a majormeans for many areas to boost local economy. However, as the housing prices continue torise, a high percentage of people with housing needs lose their purchasing power; whileanother high percent have bought their houses but turned themselves into debt-ridden houseslaves. All of the above have seriously influenced our normal life, thereby threateningsocial stability. How can we develop the economy while controlling asset bubbles? Hence itis urgent for us to find a scientific theory for support and solve such practical issueseffectively.Based on its extensive research on domestic and foreign real estate literature andtargeted at the development of China’s real estate industry in1998-2011, this paper reviewshistory of our real estate industry, analyses the status quo of the industry and points outexisting problems in the real estate market.As the above researches are paved, this paper discusses the factors affecting real estateprices from two aspects: costs and external environment: First, land cost, cost ofconstruction and installation, real estate tax and other costs and cost control are studied;secondly, national monetary and financial policies, construction of affordable housing, realestate speculation, per capita GDP, annual per capita disposable income and other externalenvironmental factors are analyzed.The study has found that land finance pushes up the cost of land, thereby drivinghousing prices, which may be a root cause for the rising housing prices; the increase in thecost of construction and installation also affects housing prices, however, the ratio of thecost of construction and installation to the housing prices takes on a declining trend; theburden of heavy tax over real estate may eventually be passed onto the buyers; the costcontrol may affect the cost, thereby affecting housing prices; national monetary andfinancial policies may influence housing prices and excessive credit supply may cause thehousing prices to soar; the improvement of housing security system may stabilize housingprices and large-scale construction of affordable housing may help to curb the housingprices; speculation in housing market may boost housing prices and the increase of percapita GDP and annual per capita disposable income may also cause the increase of thehousing prices.By building a mathematical model, this paper makes a quantitative analysis over four aspects: land cost, cost of construction and installation, annual per capita disposableincome and per capita GDP, and finds out the magnitude relations between these factorsand housing prices. This paper has a field survey of36development project in4cities,using practical data to further verify the influence of costs on revenues and analyzing thewhereabouts of real estate enterprises’ income and their earning performances.Directing towards the above influencing factors, this paper puts forward policyrecommendations from six aspects: solving issues about land finance, improving real estatetax system in China, strengthening the real estate cost control, enhancing housing creditcontrol, accelerating the construction of affordable housing system and taking effectivemeasures to curb real estate speculators. In the end, this paper summarizes mainconclusions and indicates its limitations of study while pointing out issues and directionsfor further research.One innovative achievement of this exploratory research is: the paper has a systematicanalysis of influencing factors of housing prices from two aspects of cost and externalenvironment; on the basis of a systematic analysis of land cost and the underlying reason,this paper puts forward the conclusion that "land finance pushes up the cost of land, therebydriving up housing prices"; this paper reveals each factor’s influence on housing pricesthrough a mathematical model, using two or more statistical tools such as column charts,line charts and area charts to analyze relationships between each influencing factor andhousing prices respectively and display the extent of each factor’s influence in a vividmanner.