The Most Complex Products

China's housing market is undertaking a rapid development, so with the soaring price, there's needing to discuss does the bubble exist now. This article is not focusing on the bubble itself, but to analyze the micro-foundation of the demand and supply of the market, and examine which factor is the major cause of the high price. This article can fill the blanket that there are no such theoretical or statistical study in China.The article is consisting of two parts. The first part include four chapters, each particularly introduces the relative research on the sub-topic. The chapter 1 discusses some characteristics very different from the classic theory's assumption, such as heterogeneity, durability, spatial fixity, and externality of housing. The chapter 2 discusses the role that housing play in the capital market, such as how to deal with the duet-status of housing, and what will finance market condition impact on housing demand, then discusses the fluctuation of housing market. The chapter 3 discusses some special topic of housing supply, such as the limitation on housing building, the pricing behavior, and the discrimination behavior, all come out that housing market is not a competitive market. The chapter 4 discusses the impact from the local government's policy, explains why and how does the government get involved in, especially the impacts from the supply of public goods and the control on land using.The second part starts discussing the current problem in China. The chapter 5 does some preparing work, explains which assumptions are according with China's reality, and explains the data be used in the positive research, then analyzes the age distribution as the important background for understanding. The chapter 6 gives some qualitative analysis of the consumer's demand and the investor's demand and the speculative demand, estimates the aggregate demand function, so proves that the demand contributes little to the high price. The chapter 7 discusses the monopoly behavior and pricing behavior of the housing supply, and presents a hypothesis about the collusion between the housing producers, and estimates the aggregate supply function, so proves that the supply contributes more to the high price. The chapter 7 discusses the impact from the local government's policy, using a model to combine the demolishing policy with the public goods supply and land auction, then estimates the total effects of the high land price on the housing price.The final conclusion of this article is that the government's behavior contributes most to the current high housing price.