An empirical analysis on the housing prices in the Pearl River Delta Economic Region of China

摘要

As the region with the fastest and highest level of economic growth in China, the instability of the Pearl River Delta Economic Region's (PRDER) housing prices has always been a social focus. In order to make housing price stabilization policies effective, more research is required about China's housing market mechanism and the influential factors of housing prices. China used to be a socialist economy since 1949. Deng Xiaoping began China's economic reform and introduced market principles in 1978. Since then China's housing had undergone transition from socialist system to market economy. After 1998, China had housing market economy. This paper aims to understand the housing price behaviour of newly transformed housing market economy of China by analysing the influential factors of China's housing prices compared to that of conventional market economy. This study established a fixed-effect model of panel data and conducts empirical analysis on the influential factors of housing prices in nine cities in the PRDER by adopting the least squares dummy variable method. Because access to China's housing markets data is extremely limited, collecting reliable and consistent housing market data at city level was the biggest challenge in this research. We successfully compiled local housing market data at city level including housing sales price index of the nine cities, number of resident (registered and non-registered-but-long-stay residents), GDP per capita, residential sales area, annual investment on housing development land purchasing cost, and so forth. The analysis confirms that China's housing market follows a market mechanism. Demand is the major driver of housing prices, housing supply tends to lower the housing prices, and land cost is positively correlated with housing prices. Since cities grow with continuing urbanization and industrialization, housing supply policy seems required to effectively stabilize the housing price.