The Study Of Housing Supply Elasticity:an Empirical Analysis Based On35Large And Medium-Sized Cities

Since the housing system reformin1998, the housing markets in China experience a sustaining price increase and the magnitude of fluctuation volaties in recent years. In this process, almost cities’housing price surged, but the price level and the price change among cities varies across regions. Most of the previous studies researched this phenomenon from the economic fundamentals and demand side. However, ignoring the effect of the supply side is not comprehensive in understanding the housing price dynamics. From the housing supply perspective, we need to know that whether the housing supply is elastic, how is the difference of housing supply elasticity among different cities and the reason that cause differences of supply elasticity across regions.This paper aims to study housing supply elasticity at the city level. A review and summary of theory and empirical research about the housing supply and the elasticity of supply is introduced. On the basis of theoretical analysis and normative analysis, the supply function of new commercial housing was built and the housing stock supply as well, then an empirical research was conducted including a data of35China’s large-medium sized cities. After the estimation of housing supply elasticity of China’s major cities, this paper tris to explore the detetminants of new housing supply elasticity among different cities.The empirical result shows that the difference of the new housing supply elasticity coefficient across regions in China is obvious.Among the35cities,19cities’ new housing supply elasticity is getater than1means the new housing supply is elastic, while3of them is less than1means lack of elasticity and the elasticity index of the other13cities’ are significantly no greater than zero which means a toally inelastic supply. The supply elasticity coefficient of stock housing is generally small or not significant. It is found that the variation of new housing supply elasticity coefficient among different cities can be partly explained by the demand factors and land factors.There is an inverse correlation between population and new housing supply elasticity. The more the housing supply restricted to the land use, the smaller the elasticity of the city. The higher the land price is, the larger the new housing elasticity. This study sheds light on the understanding of the housing supply as well as the main factors affecting the housing supply in China, and enriches the theory research related to the housing supply elasticity at the city level.