Real Estate Regulation And Control Of Economic Systems

With the increase of residents income and urbanization process in China, the real estate prices have been grown rapidly since 2004. This situation, on the one hand, increases the property income of residents and boosts the investment needs of society. But on the other hand, the heavy expenditure on housing reduces the normal consumption of population, which may decrease the residents welfare. Furthermore, unreasonable consumption structure of society is not conducive to expanding domestic demand, which will affect the sustainable economic development in China. Meanwhile, the real estate industry has a long industrial chain and extensive influence. A partial or qualitative research is often difficult to meet the research needs. Then, we need to build a general equilibrium model in order to complete a systematic and quantitative research on control policies of real estate.Against this background, the paper established a computable general equilibrium model which contains 42 departments to simulate the economic impacts for different control means on real estate market. By examining the macro-control objectives, such as residents'income, the price level of consumption and employment, and step further, measuring the difference of residents welfare after the control policies, the article evaluated the impacts of different control means under different circumstances. Based on the simulation results, it made several control recommendations for the real estate industry. This article includes four parts. The first part is a literature review. The second part constructs a computable general equilibrium model for simulation of the Chinese economy. This section also developed a social accounting matrix, and estimated the model parameters. The third part reviews the regulatory policies over the recent years and makes simulation analysis. The fourth part is the conclusions and recommendations.Through research, the paper found several meaningful conclusions as follow. Firstly, the regulation means and goals should not be to control the price of real estate. Simply limiting price will lower the welfare of population and reduce the residents income. Second, the focus of regulation is to ensure and expand the supply of real estate. Increasing protective housing construction will increase the welfare of residents. Third, fighting against speculation and investment demand is conducive to the welfare and income of population while maintaining the same real estate supply level. Fourth, taking both the simulation results and practical constraints into account, the long-term goal for real estate control policies housing is to ensure the steady growth of supply. While, the short-term focus should be on the suppressing and decreasing demand for real estate investment. Fifth, the economic effects of increasing the real estate related taxes are not good. Because that the taxes will be passed on to consumers. Sixth, in the case of small appreciation of RMB, increasing the supply of real estate can reduce the level of inflation in China and improve the social welfare.