The Research On The Real Estate Market And Its Effective Regulation In China

Since the housing system reform in1998, China’s real estate market has developedrapidly, and achieved great success. But in recent years, the housing prices has beenoverheated, the structure of housing supply is unreasonable, and it’s difficult to meet thenormal and reasonable housing needs of mid-low-income classes. Therefore, thegovernment must be involved in the real estate market regulation.In this article, using the theory of industrial organization, game theory andinformation economics theory etc., it bases the classic SCP model of the Harvard schooland the previous research results, further explores the characteristics of China’s real estatemarket, the mechanism of government regulation and its effectiveness.First, this paper introduces the connotation of the real estate market and thefoundation of government regulation theory preparing for the later analysis. Then itanalyses the structure, behavior and performance of the real estate market using the SCPmodel. At present, the real estate market in China has the characteristic of regionalmonopoly, so that a few real estate developers in the region of a city can form amonopolistic competition alliance, and the local government with the tendency to benefitfrom land sales also easily allies with developers to benefit from property development,causing the supply structure of real estate market unbalanced, pushing up prices of landand houses, making the market performance very low.Then this paper discusses the process and mechanism of government regulation ofChina’s real estate market in a new perspective—the SCP model. Through an empiricaldata, it argues that the government regulation of China’s real estate market is inefficient,failing to fundamentally solve the high prices and mid-low-income classes’ housingproblem. The reasons involved are much complex. For example, the real estate market isdeveloping under the background of China’s macroeconomic imbalances, the goals ofgovernment regulation have contradiction, methods of government regulation is usedimmaturely and measures lack operability, the local government is inadequate in theimplementation discounting the effects of policy enforcement, government regulation andmarket mechanism fail to achieve functional complementary, and there are to many barriers to entry into the real estate market etc. But the root exists in the contradictions ofthe mechanism in China’s macro-economics, and the real estate market related to thesystem design is not perfect.At last, according to the cause analysis as stated previously, this papercorrespondingly proposes the countermeasures to ensure that the government caneffectively regulate the real estate market.