Research Of The Effect Of The Policies On Domestic Real Estate Market

In the beginning of 21st century, impacted by policies of domestic demand-motivating, our real estate market developed rapidly. But our government increasingly realized that the real estate market was growing too fast. Plenty of dates indicate that there are serious problems existing in real estate market, such as the overheated investment, high price, structural imbalances and other problems. Our government has released a lot of policies since the year 2003 to adjust real estate market as to keep development in balance. But the effect of those policies is not as good as have been anticipated, the price of real estate products kept on increasing, and reached a peak last year. Professors and scholars started to analyze the price of houses and the policies.We found it is the duality of the effect of local government which warps local government's behavior as well as weakens the effect of control policies. In this paper, the regulation of real estate market is divided into two facts, the connection between center government and local government and the connection between local government and the real estate corporations. This thesis used the principal-agent theory and state capture theory to analyze the two connections respectively. Besides, game theory was also used to help researching the complicated factors. There exists information asymmetry in the relationship of principal-agent between center government and local government, which then caused moral hazard and adverse selection. For the reason of administration monopolized, local government is apt to seek rent or be captured by real estate corporations, which are manifested in the market of land and affordable housing. Therefore, the effect of regulation was affected negatively. It is necessary to establish a good supervise and encourage system in the process of regulation.