Impact Of Urbanization On City Housing Prices

As is reported in The Third Plenary Session of the 18th Central Committee of the Communist Party of China, our country has entered a rapid strategic transition stage of urbanization which focused on comprehensively improving the quality. Concerning this point, to solve the housing problem of the emerging residents is a critical issue thus makes it significant to find out the relations between urbanization and house prices. Based on the construction of city housing demand function and supply function, this paper makes a theoretical model of urbanization and city housing prices, and collects the 2005～2012 panel data from 12 cities in China for empirical test.The paper builds the demand function which divides the city housing demand into consumer demand and speculative demand, and the supply function based on Stock-Flow Model in the housing market, and establishes the theoretical model of urbanization and city housing price by combining the two functions. The theoretical model shows that:the urbanization affects city housing prices by influencing their demand and supply. During the prosperous period of the real estate market, the urbanization affects not only the city housing supply but its demand, while during the recession period, it only has effects on the demand. Accordingly, the paper proposes its propositions:If there is a long-term stable relationship between the urbanization and the city housing prices, then the effects that urbanization on the city housing demand is greater than that on the supply and the city housing prices increase with the process of the urbanization, in the present speed of the urbanization in China.The paper builds the city housing demand model and the supply model through theoretical analysis after qualitative analysis of the factors which affect the city housing supply and demand, and selects control variables including land prices, interest rates, the cost of housing, the per capital GDP and domestic loans according to the existing literature and practical significance to build the city housing price model. Adopting the 1999～2012 panel data from 35 cities in China for empirical test, the results shows that the urbanization which accounting by the household population has little effects on the city housing supply and demand, so the paper finally uses the proportion of the urban resident population which can measure the urbanization level more accurately for the empirical analysis. It turns out that the proposed model is not true after analyzing the 2005～2012 panel data from 12 cities in China:the urbanization plays a significant role in promoting the city housing demand and supply, but the push effect on the supply is greater than that the pull effect on the demand, and the equilibrium outcome is urbanization has no significant influence on housing price;in addition, the factors including land prices, housing costs, income and the loan amount have significant influence on the city housing price, while interest rates has little effects on it. However, the city housing price used for the empirical test is a average price that includes affordable housing prices, the analysis has ignored the policy factor. So, the paper makes a strict assumption that the commercial housing market and the policy housing market are completely separated, and the land price factor is contained in the commercial housing price model but excluded from the policy housing price function. Then explore the effect of affordable housing policy by comparing the coefficients of the variables in the two models. The results shows that the implementation of the policy housing has achieved its policy objectives, namely it has reduced the average housing price and increased the income elasticity of demand for the city housing. Finally, based on the results of the empirical test, the paper proposes suggestions that increase the investment to affordable housing and continue deepening the reform of income distribution.