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The Dynamic Behavior of Chinese Housing Prices

Author

Listed:
  • Changrong Deng

    () (University of Electronic Science and Technology of China)

  • Yongkai Ma

    () (University of Electronic Science and Technology of China)

  • Yao-Min Chiang

    () (National Chengchi University)

Abstract

The objective of this paper is to investigate the dynamic effects of fundamental factors on housing prices in China. We examine how quickly and strongly housing prices react to changes in these factors. We especially want to test whether these reactions change after China adopted a new system for granting land use rights in 2002. We find that the main fundamental explanatory factors explaining Chinese housing price variations are household disposable income, new-build supply, housing units sold, unemployment, and land prices. Among these factors, the most important one is land price. The effect of land prices on housing prices is especially enhanced after adoption of the new system for granting land use rights in 2002.

Suggested Citation

  • Changrong Deng & Yongkai Ma & Yao-Min Chiang, 2009. "The Dynamic Behavior of Chinese Housing Prices," International Real Estate Review, Asian Real Estate Society, vol. 12(2), pages 121-134.
  • Handle: RePEc:ire:issued:v:12:n:02:2009:p:121-134
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    References listed on IDEAS

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    1. Michael J. Potepan, 1996. "Explaining Intermetropolitan Variation in Housing Prices, Rents and Land Prices," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 24(2), pages 219-245.
    2. Clapp John M. & Giaccotto Carmelo, 1994. "The Influence of Economic Variables on Local House Price Dynamics," Journal of Urban Economics, Elsevier, vol. 36(2), pages 161-183, September.
    3. Alan G. Ahearne & John Ammer & Brian M. Doyle & Linda S. Kole & Robert F. Martin, 2005. "Monetary Policy and House Prices: A Cross-Country Study," Working Papers Central Bank of Chile 344, Central Bank of Chile.
    4. John M. Quigley, 1999. "Real Estate Prices and Economic Cycles," International Real Estate Review, Asian Real Estate Society, vol. 2(1), pages 1-20.
    5. Norman Miller & Liang Peng, 2006. "Exploring Metropolitan Housing Price Volatility," The Journal of Real Estate Finance and Economics, Springer, vol. 33(1), pages 5-18, August.
    6. G. Donald Jud & Dan T. Winkler, 2002. "The Dynamics of Metropolitan Housing Prices," Journal of Real Estate Research, American Real Estate Society, vol. 23(1/2), pages 29-46.
    7. Zhong-guo Zhou, 1997. "Forecasting Sales and Price for Existing Single-Family Homes: A VAR Model with Error Correction," Journal of Real Estate Research, American Real Estate Society, vol. 14(2), pages 155-168.
    8. Karl E. Case & Robert J. Shiller, 1990. "Forecasting Prices and Excess Returns in the Housing Market," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 18(3), pages 253-273.
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    Citations

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    Cited by:

    1. Galiani, Sebastián & Gertler, Paul J. & Undurraga, Raimundo & Cooper, Ryan & Martínez, Sebastián & Ross, Adam, 2017. "Shelter from the storm: Upgrading housing infrastructure in Latin American slums," Journal of Urban Economics, Elsevier, vol. 98(C), pages 187-213.
    2. repec:ire:issued:v:20:n:02:2017:p:207-219 is not listed on IDEAS
    3. Bergantino, Angela Stefania & Capozza, Claudia & Capurso, Mauro, 2017. "Pricing strategies: who leads and who follows in the air and rail passenger markets in Italy," Working Papers 17_3, SIET Società Italiana di Economia dei Trasporti e della Logistica.
    4. Nannan Yuan & Shigeyuki Hamori, 2014. "Are government interventions effective in regulating China fs house prices?," Discussion Papers 1427, Graduate School of Economics, Kobe University.
    5. Kelly, Robert & McQuinn, Kieran, 2013. "On the hook for impaired bank lending: Do sovereign-bank inter-linkages affect the fiscal multiplier?," Research Technical Papers 01/RT/13, Central Bank of Ireland.
    6. Liu, Chunping & Ou, Zhirong, 2017. "What determines China's housing price dynamics? New evidence from a DSGE-VAR," Cardiff Economics Working Papers E2017/4, Cardiff University, Cardiff Business School, Economics Section.

    More about this item

    Keywords

    Housing price; Fundamental factors; Land price; Land policy;

    JEL classification:

    • L85 - Industrial Organization - - Industry Studies: Services - - - Real Estate Services

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