Research On The Relationship Between City Scale And Impact Of Income Gap On Housing Price

Due to the existence of Law of diminishing marginal propensity to consume and real estate’s dual natures of investment and consumption,when the investment effect of real estate caused by income gap weighs more than its consumption nature,the income gap will promote housing prices.In addition,the crowding out effect,driving effect,and their jointly-formed positive feedback with the investment effect will also increase house prices.Furthermore,in large-scale cities,this promotion is to be strengthened.Specifically,the investment nature of real estate dominates thanks to the economic development of cities.At the same time,the expansion of urban population enhances the aforementioned crowding out effect,driving effect,and positive feedback effect.On the other hand,the growth of city economic scale and the expansion of the population are also the elements to promote effective demands of real estate,thus the impacts of income gap on housing prices are reinforced.In the empirical test,based on the disposable income data between 2011 and 2013 from the micro-survey database CHIP2013(China Residents’ Income Survey Data),the income gap is measured in 124 cities of China.With the measured income gap,house prices,and other indicators to form the shortpanel data,a pooled regression is performed.In exploring the impact mechanism of income gap on housing prices,the city’s population and economy scale variables are used for cluster analysis.And the cities of different scales are tested for the impact of income gap on housing.Finally,investment variables are introduced to verify the theoretical hypothesis that the investment nature of real estimate in large-scale cities prevails.The theoretical hypothesis has been demonstrated by empirical test results.The main conclusions are as follows: the real estate has dual natures of investment and consumption.The city scale affects the dual natures of real estate.The larger the population and economy scales of the city are,the stronger the investment nature will be.The income gap promotes the housing prices,which varies according to city scale because of its effects on the real estimate’s dual nature.Specifically,the effect will be strengthened in largescale cities,while the city scale has no significant positive impact on the income gap of city residents.Based on those conclusions,some policy recommendations are proposed.Controlling the income gap helps control the excessive rise of housing prices.City managers are advised to upgrade their management,such as improving income distribution policies and urban infrastructure,rather than simply controlling the scale of the city.In order to address the irrational growth of housing prices,on one hand,the basic consumption nature of residential real estate should be emphasized.And the policies of indemnificatory housing and the real estate tax system for housing investors are also to be improved.On the other hand,it is also necessary to lower the investment threshold of real estate(It mainly refers to non-residential real estate and long-term rented flat,such as long-term rental apartments,etc.).For example,accelerating the system design of REITs in China,relieving the tax and legal restrictions on REITs,and depressing the income threshold for real estate investment.Therefore people with high income,medium income,and low income all have the opportunity to participate in real estate investment.In addition,expanding the investment channels and enriching the investment choices of high-income groups are also relatively reasonable ways.