An Analysis Of The Reasons For Fluctuations In Housing Prices In China

Since 1998, with the reform of the housing price system, our country of real estate has already become the new growth point of the national economy and consume point. And at the same time the influence of the national economy which is affected by the fluctuation of the real estate industry becomes increasingly outstanding. This text is not only the general summary of our former articles, but more importantly that I have applied the economitrics to analysis the fluctuation of the housing price creatively according to the former articles, and I have put forward some plain suggestions and measure.First of all, I discuss the meaning, the way of thinking and the methods of my research paper, and I summarize the view point both of the international and domestic. The main research method of this article is: the combines of the theories and practices, the combines qualititive together with quantitative analysis, developing in drawing lessons from the empirical foundation of people of the past. Then I disscuss the housing price system from three aspects which are the concept of the housing price, the constituting of the housing price and the factors of affecting the housing price.There are four view points about the quality and the reasons of the business cycles among the main streams of western economy and we can sum up the conclusion of the formation of the business cycle which is affected by outside factors and inside factors. Then I elaborate the four stages of the fluctuation, which are the recovery stage, the prosperity stage, the decline stage, the recession stage. And I argue the supply-demand relation to the influence of our housing price from the static state supply-demand balanced model and the dynamic state supply-demand balanced model. The dynamic state supply-demand model may not reach to the equilibrium, because when the slope of suply elastic is bigger than the demand elastic the supply curve and the demand curve can not come to the equilibrium when they deviate from the balanced. It has the relationship between the real estate periodic fluctuation and macro economy fluctuation. For the convenience of study, we use GDP to indicate the fluctuation of macro economy and use increasing rate of sold area of commodity house to indicate the periodic fluctuation of real estate market. Economy development normally is accompanied by alternately rising and falling of interest rate and the inflation rate, the process which we called interest rate cycle and inflation cycle. Both influence the periodic fluctuation of real estate through different ways. Normally, interest rate fluctuates in the reverse direction of the real estate fluctuation. Low interest rate incites the expansion of real estate, while high interest rate makes real estate declining. There is a lag period when interest rate influence the real estate industry, which could be shown in the fluctuation time sequence, interest fluctuation cycle normally is one year earlier than real estate cycle. Inflation raises nominal price and actual value of real estate, push the expansion of real estate. As both an investment and a consumption product, real estate in most occasions could become the rampart to defense inflation. Inflation cycle has a positive correlation with the real estate cycle, but is a slight different in the fluctuation time sequence. In China, the real estate cycle lead inflation cycle about one year. Generally speaking, in China, the relationship between real estate economy cycle and interestrate cycle as well as inflation cycle is accord with the theory, with some exception years when influenced by external factors such as policy.At last the author analyzes the fluctuation of housing price. First according to Abaraham and Hendershott(1996) standpoint, we divide two steps to analyze the fluctuation of the real housing price. First the equilibrium price is determined by the out facters. Second the present price is the function of former price, the deviation between present price and former price and the variation of the equilibrium price. We defined two important index signs according to the economics model during the analytical process which are the related coefficience and restrain coefficience. On this foundation, the article uses the front-panel data of China from 1991 to 2005 to analyze the fluctuation of housing price. The conclusion is that the increment of residents' income, the increasing cost of new built houses and the rising of the population will make the housing price goes up. Through estimating the related coefficience and the restrain coefficience we could explained the reason of the fluctuation of the housing price.According to the above analysis, I put forward some basic policies and recomdations to the development of our country's housing market. It contains that we have to improve the land supply system , to push the housing market become industrialization, to regularize the real estate business enterprise, to strengthen the support to personally buying houses, to develop the function of government to control the macro economy.