| Base on the domestic and foreign scholars'study of the housing price theory, this article using the theoretical and empirical analysis method to deeply study the reasons of the housing price rising during 1998-2007 in China. This paper is divided into ten chapters.In chapter two which summarizes the existing housing prices theoretical system in China and abroad. The main contents include the concept of the housing price system using in the product market, the concept of the housing price system using in the asset market, and the dynamics non-equilibrium theory using in the housing market. Compare the domestic with overseas research on the real estate market, we can know the overseas theory system is better, and the domestic theory system is lacking. In particular, the non-equilibrium quantitative analysis for the national real estate market is lack of attention in current macroeconomic situation, and also lack of quantitative research in the macro-control measures, cordon establish, etc.In Chapter three, the empirical description of the national housing system in 1998-2007 mainly base on the housing institution, the real estate macro-control policy, the impact on the national economy from the housing industry, the real estate development enterprise, and the residential markets. From the policies of the housing industry during 1998-2007, we can know the government has increased the degree of attention on the housing market, which played an important role in the development of national economy. At the meantime, the development area in domestic residential market, house prices and people living standards have greatly improved.Chapter four, the Paper focuses on the analysis of domestic market supply impacted on the housing price in 1998-2007. Through the definition of land supply cost system, the Paper has analyzed the different factors which impacted the land supply prices. And using S-D model to analyze the national land supply institution, found that as a collective land only through government purchasing and storage before entering the supply market has led to reduced supply of land and can not be adjusted in accordance with market demand as soon as possible, so that the supply curve outward and rigidity increase over in the model. The Government's land auction system and the local government's pursuit for profit behavior further strengthen the anticipation of the land requirement competition and future inadequate land supply, thus push the demand curve, so that the land price increased much more while the demand growth. However, during the Chinese real estate development three are numerous taxes and fees, and take a high proportion in the construction costs. But low taxes in holding properties. So that increased residential development costs which is transferred to the buyers. The result is housing prices go up, and also stimulate the demand of house speculative investment. Therefore, the basis reason of housing price rapid increases are the Chinese land transfer system and the defects of tax system, so adjust relevant systems is the fundamental of inhibiting housing price rapid increases.Chapter five, have discussed the relationship between the Chinese domestic market structure and housing price rising. Using Bain's market classification, it shows that the Chinese real estate market is a monopoly competitive market structure, and real estate development enterprise does not have ability to unilateral control the housing prices and promote the high prices. Through the analysis of cost advantages and technical advantages method, scale economies and financial barriers method, and policy and land barriers method, we can knew that the entry barriers on the real estate industry mainly shows on the economies of scale and capital barriers, which is determined by the real estate industry is a capital-intensive industry. In this section, we did regional market structure analysis in a few major cities where housing prices rose faster. Obviously, their city's real estate market concentration is relatively higher than others. Although we can see the city's market concentration is significantly higher, but still can not reach the level of concentration oligopoly model, it is a monopolistic competitive market structure. Thus, some scholars have characterized the Chinese real estate market is the region oligopolistic structure, and summarized the reasons for the rise in house prices is unreasonable. In Paper's opinion, The root causes of the rising housing prices is not the monopoly of the supply side, but in the process of urbanization in Chinese generated excess demand.Chapter six mainly focuses on the analysis of domestic market demand impacted on the housing price in 1998-2007. After identify the factors which affecting demand, we established a demand function model and did an empirical analysis. As a result, rigid demand is the main reason for urban housing prices rising. In addition, the Paper also did an elastic analysis in Shanghai, Beijing, Guangzhou, Jinan and Chongqing housing market. In particular, the Income and demand in Shanghai is not related, the price of the demand curve slope is positive, prices rising while demand increased, but interest rate did not great impact on demand, so obviously housing prices rising in Shanghai imputed to the investment-driven. However, Jinan, Chongqing and Guangzhou market, income and demand in general a positive correlation, income rising means demand increase, and its demand curve showed strong rigidity. So the real needs of these cities are the fundamental driving force of prices.Chapter seven did an empirical analysis for housing price rising quickly in 1998-2007. Through analyzed the housing price and indicators of the national economy, the Paper conclude that:the rising of national economy is faster than the housing price in 1998-2007, and there is some relationship between them. Through further analyze on the relationship of housing prices, macroeconomic indicators, individual housing loans, second house purchase or investment purchase, we know that national macro-economic development can justify rapid increases in housing prices, while it is also a further boost domestic price due to the individual bank loans business, and second house purchasing.Base on the previous analysis, Chapter eight, conducted a sub-regional, sub-urban differences study in housing market. Through the study, have found out that reason of housing prices rising rapid is due to the real demand and investment demand. In particular in some first-tie cities, it's mainly driven investments, but in medium and small cities, housing price is a true demand-driven. So we believe that the domestic real estate market in cities marked regional differences, government in formulating relevant policies and regulations have to give more consideration to various cities, in particular, the difference between big and small cities, and have to prevent adopt a "blanket" policy which would hindered the real estate industry healthy and stable developing.At last, compared the real estate market on the two countries, we can see that the U.S. housing market has a long history, and enjoys a relatively mature market development model and a standardized system. But the Chinese real estate industry started relatively late, and now is developing stage. Order to stimulate economic development, stimulate domestic demand, continuous introduce a variety of favorable policies; the gradual development of real estate industry is identified as an important pillar industry of the national economy. Compare with housing prices and the macroeconomic indicators analysis by the two countries, we can see, during1998-2007, both of China and the U.S. housing prices have increased greatly, in particularly Chinese per capita gross domestic product and urban residential disposable income growth are far greater than the increase of housing prices. To the contrary, United States, the rapid rise in housing price does not have solid economic foundation, and even a bubble, and eventually cause the global economic crisis. Although Chinese real estate market got some problems, but the rapid development of the domestic housing market has a solid economic foundation, which is different with the United States. And the financial derivative products and tools are not allowed to enter into the financial sector in China. Therefore, there will not appear severe financial crisis and disaster in real estate market in China.Based on the deeply empirical research in housing market during 1998-2007, the Paper has explained the reasons of rapid rise in housing prices. And it is significant that through this work can help to understand the real estate market operation rules, to explain housing prices slump in 2008 and sudden rise in 2009 in domestic real estate market, and to estimate Chinese future development trend of the real estate market.Innovation of this paper:1. For the first time, systematically organize the domestic and foreign housing price theory, especially foreign theory;2. Using S-D model to analyze Chinese land systems, which are most important factors of supply constraints for housing construction. Based on this, it effectively explains the paradox which is land supply blow up while land price goes up;3. Through empirical studies indicate that the fundamental driving force of the rapid development of housing industry is real demand in China during 1998-2007, while investment in speculative demand also played an important role, but investment demand in first-tie cities is more than the actual demand in recent years. However these two types of demand showed significant regional differences;4. Policy recommendations which are ensure the real needs of the housing industry developing healthily, simultaneously inhibit investment in speculative demand and stabilize housing prices rising in China.
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