The House Price To Income Ratio Research In China

Since our country began the market reform of housing allotment, housing market has developed rapidly. More and more citizens improved their living condition by purchasing ordinary house and other living units benefited from government policy. However, continuously rising house price has put a heavy pressure on those citizens whose income increased rather slowly. It is a publicly concerned issue that how to value citizens' housing purchasing power. This paper adopted the widely-used international index of the house price to income ratio to research this issue in our country and analyzed actual house-purchasing power of residents in Xi'an city.The paper utilized a lot of existing research documents, combining economic basic principle and research method, stated that the adapt scope of the house price to income ratio, as an index to value house-purchasing power of residents, directly related to the financial policy of state (region) and the propensity to consume confined by citizen's financial accumulation. Based on families' income and their payment ability to loan, the paper established a house-purchasing power model, resulted that the suitable scope of the house price to income ratio is between 2.4 to 7.9, and furthermore, through the dynamic and static analysis of house price to income ratio in Xi'an city, deduced that the house-purchasing power has relatively dropped after 2004 because of the soaring housing price. The static analysis on the house price to income ratio showed that it is difficult for the middle and lower income families to purchase their house.Finally, the paper advised to improve the accommodation environment of the mid-income families and their house-purchasing power by means of system establishment, construction of supply and demand, financial creation and information distribution.