Empirical Research Of The Relationship Between China Urbanization And Real Estate Price

As a booster of economic growth and human civilization, urbanization has become an irreversible trend in the development of the world. It can be represented by the concentration of population to the cities, the increase in the number of cities, and the improvement of urban modernization. It also reflects a fundamental change in structure of economy and society. Driven by the new economy and globalization, urbanization is undergoing at an unprecedented rate in China:The urbanization level in China in 2009 was 46.6%, and it has been internationally recognized that the country has stepped into an accelerating development stage when the level of urbanization is developing from 30% to 70%. The rapid development of urbanization in China has a huge economic impact; it has been accompanied with continuing development of the real estate industry, which has become one of the most important research areas. In the process of urbanization, a large number of rural populations move to cities and towns, which lead to advancing demands on the cities' housing and promotes the rise of housing price. But now the housing prices are rising so quickly and becoming so high that most people cannot afford it. So it would hamper the rapid development of urbanization. Therefore, the study of the complicated relationship between urbanization and housing prices, and finding corresponding solution for existing problems are necessary.Basing on existing research results of domestic and foreign scholars, this paper firstly makes some brief analysis towards China's urbanization and housing prices. Urbanization's effects on housing prices is mainly manifested in the change of ever-increasing effective demand for the apartment in the city, which promotes the rise of housing prices, as the amount of land resources is limited. Rising of the housing prices has two major impacts towards urbanization:The positive role is promoting and the reverse one is inhibiting. Rising housing prices can promote the increase of housing provision, which is conducive to improving the urban living environment and can also resolves the rural employment problems greatly by increasing requirement of builders, and then promotes the urbanization development. However, soaring housing prices can make it much more expensive to live in city, then dampens the urbanization process. Afterwards, this paper gives a clear definition of urbanization and description of characteristics of real estate prices, confirms the indexes, then analyses the status and development trend of China's urbanization and housing prices.Next, this paper establishes the EBA model and error correction model basing on national time series data, and a fixed effect panel data model basing on data of 36 cities to give a multiple perspective of relationship between urbanization in China and the price of commercial housing. First of all, it adopts the national time series data from 1998Q1 to 2010Q2, selects the commercial housing sales price, the level of urbanization, land transaction prices, per capita disposable income of urban households, expectation of prices to establish the EBA model. This model makes some prior studies of the relationship between housing prices and urbanization. The result shows the relationship among the level of urbanization and the commercial housing price is significantly positive, that is, at this stage, raising the level of urbanization would lead to the rise of commercial housing prices. Based on the EBA model, it furtherly selects the commercial housing sales price, land transaction price, the level of urbanization, and per capita disposable income of urban households' index to establish the error correction model. The empirical results shows that there exists a long-term co-integration relationship among the linear combination of the sales price of commercial housing, urbanization, land transaction prices and disposable income of urban households, that is, when the level of urbanization increases, due to the immigration of a large rural population into the towns, and the large rising demand of apartments, housing prices would also increase. Increasing of production costs caused by the rising of land transaction price also leads to rising of house prices. Short-term commercial housing sales price changes can be divided into two parts:short-term changes in the level of urbanization and other factors, which are the impacts of deviation from the long-run equilibrium. Giving a positive shock to the level of urbanization, it also can be passed to the housing price; urbanization has a significantly positive impact on the commercial housing prices. Using 36 cities'panel data during 1998 and 2008, it selects the commercial housing sales price, the level of urbanization, land transactions price index, urban household per capita disposable income and other indicators to establish a fixed effect model, empirical results shows that the level of urbanization and the commercial housing price has a long-term equilibrium relationship; There exists a significantly positive relationship among urbanization level, per capita disposable income of urban households and commercial housing prices:both urbanization and per capita disposable income of urban households have positive effect on demand for apartments, thus then both factors contribute to the rise in housing prices. Finally, on the basis of previous research, this paper puts forward some policy recommendations.