Research On Functional Reconstruction Of China's Housing Finance

Since Housing Institutional reform, China's Housing Markets has made a great achievement. But for the better part of a decade, the contradictions of Housing Markets are getting evidence, in which the issue of rising housing price is the most outstanding. Our central government has implemented a series of policies and measures to regulate housing price, yet they didn't produce noticeable effect. So, we must deeply analyse the root of the problems and establish recurrent intervention mechanism in order to heighten efficiency of policy and contribute to the sustained and sound development of Housing Markets.Finance is an important component of Housing Market development and an important channel through that policy would be in action. Along with reform of housing system, our Housing Finance system is improving day by day and vigorously propel Housing Markets forward. But gradually, those problems of housing financial system began to show and aggravates the irrational exuberance of Housing Markets. At the same time, the subprime crisis gave a warning to us that we must prospectively reform our Housing Financial system. So, this paper research two issues:one is the relationship between housing consumption and variables of housing finance, the other one is what is functions of Housing Finance which help Housing Markets get sustain and sound development.This paper consists of eight chapters, which are divided into four parts.The first part covers Chapter one and two. The part briefly summary the development of China's Housing Markets since the reform and opening policy, and then examples these policies and measures which aim at regulating and controlling Housing Markets.We wake that these policies which are dead ahead housing price have limited effects because price is mainly decided by market forces. So, we claim to investigate the micromechanism of interreaction between Housing Consumption and Housing Finance, analyse the due functions, and then suggest reform proposals about our Housing Financial system. This part sums up literatures of three aspects:attribute of Housing Consumption, relationship between Housing Consumption and Housing Finance, existing problem in our Housing Financial system, and focuses angle of view on household, which makes decision of Housing Consumption.The second part includes the Chapter three and four, which is theoretical analysis. Chapter three is about attribute of Housing Consumption, Chapter four is about the functions of Housing Finance. We consider that Housing bears dual attributes——consumption goods and capital goods, which are inseparable as for the same behavior of Housing Consumption. On condition of virtual economy, the attribute as capital goods of Housing is strengthened, which would intensify fluctuation of Housing Markets. Chapter three gives a model of utility maximization of household which has infinite life and indicates that Housing Consumption exists crowding-out effect and leverage effect, procyclical housing credit policy would strengthen self-circulation of Housing Markets, twisted housing credit policy would intensify fluctuation of housing price. The Chapter four is theoretical analysis about the function of Housing Finance. We state hierarchy of Housing Finance's functions, emphasis the relationship of.these functions, and analyse the conditions which are favorable for accomplishing these functions. In addition, this part discusses the question of the role of government in Housing Finance. The main conclusion of this chapter is that the function of risk management is the core function of Housing Finance, which involves not only the "transverse" diversification of risk, but also the "longitudinal" risk containment.The third part is composed of the Chapter five and six, which is positive analysis. In Chapter five, we summarize typical pattern of Housing Finance on the basis of functional perspective and think out that the Housing Financial system which lies stress on risk management would be fitter and corresponding Housing Markets is better, too. The Chapter six is sabout our Housing Financial system. On the background of reform of housing system, we generalize current situation of our Housing Financial system in two sides of institution and product. And then, we parse the function of our Housing Financial system and deem that our Housing Financial system is powerful in respect of mobilizing savings and interperiodly allocating capital, but makes further distortion of the housing price and exists critical defect in the function of risk management. Political Housing Finance is the other important issue in this chapter. We hold that the role of governmental credit is absent and the political Housing Finance contends with commercial Housing Finance, which despiritualizes political finance.The fourth part is the Chapter seven. In this part, we pus forward the proposal for reconstruction of our Housing Financial system which relates to three aspects: commercial Housing Finance, political Housing Finance and financial supervision.