| The real estate industry is the pillar industry of national economy. Each year, the real estate industry absorbs a lot of labors and promotes the development of the steel industry, cement industry and many other related industries. Real estate market is closely related with the financial market. Its boom will lead to the boom of the financial market, and its recession will restraint the development of financial market.Real estate is necessity for everyone. As the pillar industry of the national economy, its steady growth and continued development have a significant impact on the stability of financial system, the development of national economy and the improvement of people's living condition. However, the house price has continued to increase so fast in recent years. According to the data from China Statistical Yearbook, the average urban house price per square meter was 2,359 Yuan in 2003, while in 2007 it increased to 3,864 Yuan, which had a total increase of 63.8% in four years. The increase speed in some large cities is much larger, and there is obvious bubble. For example, according to the statistical data of Beijing, the average house price per square meter was 4455.88 Yuan in 2003, while in 2007 it increased to 10,661.12 Yuan, so we can see the total increase is 139.3% in just four years. The quick price increase will create a bubble. Once the bubble bursts, it will bring great disaster to the financial system and the whole economy. As we all know, house price is decided by both supply and demand of the real estate market. This article's analysis is based on the impact of supply and demand on the price. First, this article reveals supply and demand situation and price fluctuations in the real estate market by detailed data; then, it analyzes the characteristics of the real estate market supply and demand, and their impact on price fluctuations. This analysis is separated into two aspects, one is the real estate market supply and demand's impact on the rising price, the other is the real estate market supply and demand's impact on the declining price; finally, We empirically study the demand function in real estate market, and verify the characteristics of demand in real estate market, which will support the above analysis.Through the research, we find that investment demand plays a very important role in house price's continuous decline or increase. This is due to the nature of investment demand, the goal of which is to sell at a higher price. Investment demand promotes long-term price increase during the house price rising term, but when the investment demand changes to be a lot of supply, it will promotes long-term price decline during the house price declining term.If we know the real estate supply and demand impact on price, we can stop the house price from rising sharply. |
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