Study On The Chinese Commercial Housing Market And The Governance And Regulation Of Developer’s Behavior

Chinese real estate undergoes more than ten years of development, and has already become the basic and pillar industry of national economy. In recent years, the Chinese commercial residential building price intensifies wholly, causing the increase in investment be too fast and too quickly, the supply and demand structure seriously out-of-balance, the constant increase of idle areas, and some illegitimate competition behaviors. Meanwhile the supply of ensuring houses is seriously insufficient. These problems have already jeopardized the industry, initiated a series of bad social consequences, and aggravated social conflicts. Indeed they are now the concerned focus of various circles of society. To settle these problems well, we must draw support from the government, rather than rely only on the market mechanism for spontaneous adjustment. Here we see the importance for the government to use economic means and administrative means to manage the market environment of commodity apartment, and to strengthen the regulation on the bad behaviors of the developers. The market of house is divided into two sub-systems:the guarantee house market and the commercial house market. They have connection to each other and operate independently. Among them commercial house market is the ox muzzle of the housing market, and the primary cause for social conflicts. If we can solve the problems in this market, all the troubles in the housing market can be easily solved. Because of this, this dissertation takes the market of guarantee houses as an important influencing factor of the housing market. In this way, we can go deep into the commercial housing market, analyzing the problems and solutions systematically, so as to get a better and more comprehensive understanding of the subject.Industry regulation is a kind of government interference behavior in case of market failure. As an assisting function of market economy, it aims to draw the market back on the normal and rational orbit. The dissertation uses the SCP model of Harvard school for the analysis framework, from the aspect of industry, to solve the coexistence high price and high emptiness, and the relative severe social consequence. It first analyzes the formation mechanism of regional oligarch in Chinese commercial residential housing market. Then it analyzes, based on the over-prosperous demand in the regional oligarch structure, the behavior and harmful trend of developers, as well as its bad social sequences. Finally it puts forward measures to rule the environment of commercial residential housing market and to regulate the misbehavior of developers, so as to solve the problems discussed above.The dissertation is formed by six chapters. The first chapter is the introduction, with the value of the study, the framework of the dissertation, the main idea of all the chapters, and the innovative points as well as the weak points.Chapter two introduces the theories employed in this thesis, with literature review, both at home and abroad, as the theoretical foundation for herein follow-up study.Chapters three, four, and five are cores herein. Chapter three clarifies the characteristics of commercial residential buildings and the market; It is analyzed that the land finance leads to the lack of government regulation; Persons with low and middle income pours into the commercial housing market, because there are not enough ensuring houses for them, thus makes the market demand grows too prosperously; Investment channels are so narrow that hot money runs into the sousing market and put the prices goes up continuously. The dissertation also points out that developers, out of the self-interested economic person, seeks monopoly position by utilizing these characteristics and defects of market environment, which helps the formation of the regional oligopoly commercial housing market. It also reveals the features of the oligopoly.Chapter four analyzes the price competition and non-rice competition behaviors of developers, complicated by the continuously prosperous demand, the lack of government regulation, and regional oligopoly. It points out that non-price competition is the developer’s preferential tactics, and that there are harmful trends existing among them, such as running after monopolizing pricing, hoarding the land, sealing a rare sale, making the hot false appearance of purchasing house with " salesperson’s decoy " etc. The dissertation points out that the market defects and the developer’s bad behavior and inclination have initiated a series of serious bad consequences, aggravate social contradiction and conflict, and destroyed the harmonious stability of the society.Chapter five, on the basis of chapter four, expounds the fact that because of the obvious defects existing in the market environment of commercial residential building, the developer’s behavior has obvious harmful trends. Therefore it necessary and urgent for the government to regulate the market environment, correct its defect, strengthen the regulation, and inhibit developer’s bad behaviors Then, it puts forward concrete measures to solves all the problems.Chapter six is the conclusion and outlook.This dissertation explores the following aspects in order to be innovative:(1) It analyses and appraises the formation mechanism of Chinese commercial housing market and the regional oligopoly market structure, and reveals its basic features. It argues that residential buildings have such characteristics as spatial fixity, heterogeneous multi-use value, durability and high resistance and expensiveness. The land lax in the commercial housing market causes the government to loosen regulation; the serious shortage of ensuring residential buildings pushes many persons with low and middle income into the commercial housing market, and thus causes continuous prosperous demand; The narrow investment channel lures a lot of speculators into real estate market, pushing prices soaring. Finally the developers, motivated by the self interest of economic persons, make use of the residential properties and market environmental shortcomings, to seek monopoly status, and thus form a regional oligopoly market structure, the feature of which is revealed.(2) It analyses the price competition and non-price competition of developers, in the situation of overheated demand, defected regulation, and significant deficiencies in the market environment, and proves that non-price competition is the priority strategic point of the developers. It also exposes the serious misconduct of the developers, together with the adverse social consequences, such as monopoly pricing, false information, hoarding land, protected reluctant sellers, speeding up the occupation of land resources, corruption, unfair distribution, distorted, investment allocation that causing the real economy hollow. All these adverse social consequences will definitely affect the social harmony and stability. (3) It proves the necessity and urgency for us to improve the defect market environment and to regulate the bad behaviors of developers, and puts forward countermeasures and solutions, such as reforming the division of power between central and local governments, tax distribution ratio, and the performance evaluation methods; eliminating land finance; taking constructing and supplying ensuring residential buildings as the main assessment indicators of local government performance; eliminating the overheated demand in commercial housing market by increasing the supply of ensuring residential buildings; controlling over the over-speculation in commercial housing market; regulating the misconducts of developers, like monopoly pricing behavior, false advertisements, exaggerating differences between domestic goods and performance, hoarding land and reluctant selling. Hopefully all these measures, focusing on strengthening the governance and regulation, will ensure the commercial housing market of healthy and stable development.(4) It reveals the characteristics of housing commodities and its market. The dissertation insists that limited land resources and the immovable commercial residential buildings constitute the monopoly of commodity housing market. Information asymmetries and the monopoly pricing explains the excessive profits of the housing industry, the high prices of commercial residential buildings, the abnormal boom of property speculation and investment.(5) It constructs the game model between the developers. The dissertation uses integrated game models to analyze the economic realities in China residential housing market. It constructs the game model between developers, analyzing the ingredient of commercial housing prices and their impact factors, and points out that the market competition among developers is not just the price competition, but more importantly, the non-price competition, which now is the main form of competition in the real estate market, and is a priority strategy for the real estate industry.Limited by the cultivation and research capacity of the author, there are still some shortcomings in this dissertation, such as the difficulties in obtaining the data of commercial housing market, the integration of the mechanism of government regulation and the market mechanism. All such issues will be further explored in the future.