An Empirical Analysis Upon The Investment Propensity Of Housing Buyers Based On Housing Demand Function

With the continuous development of China's real estate market, real estate has become a pillar industry of national economy. But at the same time, rapid rise in housing prices has become an indisputable fact. The expectations of high capital gains on housing assets prompt people to invest in the housing market actively. How to grasp the degree of investment, and a reasonable balance between investment and consumption, has become the top priority of government work in 2010. However, as the grasp of people's propensity to invest in yet is not sufficiently precise and clear, the implementation of policies still lack confidence and strength.This study analyze the motives of housing buyers, that is whether the investment demand has surpassed consumer demand's dominant position, basing on housing demand function, using the microcosmic data of family housing buying from the urban area of Hangzhou. The study basing on previous studies, using standardized analysis and empirical research methods combined, from the perspective of housing services and theoretical level, combining with site visits and research, analyzes and solves the problem systematically.The data indicates that there is significantly positive correlation between demand quantity and house price, and the own-demand for owner-occupied housing is upward sloping, if housing characteristics are the same. This result refutes the standard traditional model of consumer demand, and also is opposite to the main conclusions of housing demand in the past. That is because of the expected capital gains effect which induces individuals to buy more owner-occupied housing services when its price increases. Then, housing's role as an investment asset, with its potential for capital gains, dominates its role as consumption good. The econometric result needs the focus of the community, particularly needs the government to introduce targeted and effective polices timely, and implement them firmly, in order to inhibit the over-investment in the housing market and promote the healthy and steady development of China's real estate industry.