Equilibrium Analysis Of China’s Real Estate Market

Since China has completed the commercialization reform of housing in 1998, the real estate market begins to develop vigorously, gradually becoming the leading national and pillar industry, and a major force of promoting the rapid national economic growth. However, at the same time of the fast development of real estate, a series of issues appear, such as the soaring of house price, the prevalence of speculation, the severely wasted land resources and the common people’s housing which could not be guaranteed. The government has issued some relevant policies to regulate and control the real estate market several times, but with little effect. People can’t help asking:what’s wrong with our real estate market actually? What’s wrong with the process of the government’s regulating and controlling the real estate market? What could the government do in the future?Practice calls for the theoretical guidance. This thesis uses the partial equilibrium theory in economics as the main line of study, and integrates the knowledge in finance, investment, city economics, behavioral economics, game theory and other disciplines. It applies the research method of combining the theoretical derivation and empirical research and builds a set of relatively complete local equilibrium theory system of real estate market. By research. I find that our current real estate market is not balanced, but imbalanced, and the imbalance degree is quite serious. With the probing of the imbalance phenomenon, I’ve found the following reasons of the problem. Irrational expectation is the internal cause of the excessive demand of the real estate speculation, while excessive financial support is the external cause. The direct cause is the oligopoly supply of the real estate developers, while the government’s complete monopoly control of the land indirectly leads to the shortage of real estate supply. Meanwhile, high transaction costs have been passed on to real estate price, which also affects the formation of real estate equilibrium. Therefore, the government cannot be uninformed to launch real estate policies which may aggravate the imbalance and also cannot seek the short-term policies of "Head hurt, treat head, feet hurt, treat feet". The government should first be clear about the target and mechanism of regulating and controlling the real estate,including inhibiting the speculative demand, regulating monopoly, reducing the high transaction costs, so that the imbalanced real estate can go back to be balanced. And then, around the above targets, about the formulation and implementation of policies concerning the land, finance, tax and price, I put forward some constructive and prospective suggestions in the thesis for the government choice and reference. At the end of the thesis, I take Chongqing as an example. Its successful experience proves the correctness of the above ideas and countermeasures for solving the problems of real estate, and increases the realistic guiding significance.