Speculative Factors, Assessment Of China's Urban Housing Prices

Housing market is an important component of the economy. An effective housing market facilitates economic development and national wealth accummulation. Since 2003, China's housing market has expeteinced a rapid growth, with house prices hiking due to speculative demand. When bubble exists, house prices do not reflect fundamentals, which will lead to resource misallocation and have substantial impact on the economy.In this paper, Data Envelopment Analysis (DEA) was introduced into the accessment of the speculative behavior in China's housing market using city level data of 35 urban areas in 2007-2009. Speculative factors were calculated and decomposed utilizing Malmquist index. We find that the speculative behavior in China's housing market varies in time and space. Among the three years,2007 witnessed the biggest bubble and 2008 faced a low season followed by a moderate recovery in 2009. East China was the main target of speculative bahavior which had shown interest in West and Central China at the end of the three years. The method adopteded in this paper could also be applied to assess the performance of goverment officials who are in charge of housing policies.