The Estimation Of The Housing Price Bubble And The Study On The Property Tax Pricing To Suppress Housing Speculation In China’s First-Tier Cities

In 1998,the State Council issued the "Notice on Further Deepening the Reform of Urban Housing System and Accelerating Housing Construction",promoted the privatization of real estate and completely ended the traditional housing distribution system.Since then,China’s real estate industry has undergone a major transition from a planned economy to a market economy.The rapid development of the real estate industry has significantly improved the living conditions of our residents.At the same time,it has also driven the development of the upstream and downstream industrial chain and related industries,which has significantly promoted China’s overall economic development.From 1998 to 2016,China’s GDP increased from 8519.55 billion yuan to 74358.55 billion yuan.As the GDP continues to increase and the economy develops at a high speed,China’s economy growth is also increasingly dependent on the real estate industry.However,from international perspective,Japan’s economy was stagnant due to the bursting of the real estate bubble in the 1990 s,thus experienced a “lost decade”.In 2007,the financial crisis in the United States was also due to the bursting of asset bubbles,especially the real estate bubble.These are examples of world economic powerhouse fell into economic crisis as a result of real estate problems.Whether there is a bubble in China’s real estate market,whether the introduction of property tax can be an effective means of de-bubbling the real estate market,and how to set the property tax rate has become a debate among many economists.Based on researches on the evaluation of China’s housing price bubble,this paper attempts to estimate pricing bubble in China’s first-tier cities using the house price to income ratio and housing expenditure to income ratio.It analyzes the fluctuation of housing price in Shanghai after the city’s trial of property tax,assesses the role of property tax in restraining the growth of house prices.Considering commercial housing has dual attributes of both consumption and investment purpose,from the perspective of demand for consumption,this paper conducts qualitative analysis to compare the behavioral and cost differences between rigid demand and speculative purchases,to point out that the conceptual differences of property tax in China from international practice.Based on the principal of “housing is for dwell,not for speculation”,suggests levying property tax only on family with two or more housing units,and introduces the measure of rental/purchase ratio for the first time.Through analyzing investment return by comparing rental income vs.purchase price,financial leverage from the mortgage loan,source of ability to pay for speculative purchase of multiple units,obtains the relationship of variables such as: yield of investment products of current market,house value appreciation of current year,current rent level and historical mortgage rates.The property tax pricing model is subsequently derived using the above variables with the intent to suppresses housing speculation.The effective control range of the property tax rate is also delineated.Hope it provides a reference for the assessment of the real estate tax rate in China.