Research On The Price Formation Mechanism Of Zhengzhou Real Estate Market

In recent years, the real estate price of China rose continuously and rapidly. From2000to2011in our country, the average sale price of the commercial residential building rose from2112yuan per square meter to5381yuan per square meter, and the growth rate in2005and2009had reached16.7%and23.2%. The trend was more obvious in some large and medium cities such as Beijing, Shanghai, Guangzhou and Shenzhen,and the rising speed once exceeded the speed of the national economy and residents income growth. This phenomenon had not only aroused concerns of the community,but also became the prominent research issue of experts and scholars. Caused by the continuous and rapid rise in real estate price,some social problems, such as the enlarging of the gap between the rich and the poor, rising prices, real-estate bubble,etc, not only significantly affected people’s living standards, but also hindered the economic structural adjustment, even led to economic crisis. Therefore, our government had put forward a lot of measures to regulate and control the rising price in real estate market since2003. Although there were a large number of research results and a series of measures, and they also had achieved some initial results,the real estate price fell slowly, and the control effects were not very obvious. So it is necessary to deeply analyze the real estate price formation mechanism, in order to provide reference for our regulating and controlling measures.The development of the real estate market in Zhengzhou was relatively rapid. Since2005, the share of the real estate investment in the fixed asset investment had been over20%, which exceeded the national average level.From2003to2010, the growth of the residential actual sales mostly maintained above40%(except that2004was19.7%, and2008was negative growth), and the growth in2005and2009even reached121.0%and92.2%, which also exceeded the national average level (and the growth in2008is negative, too). At the same time, the growth of the real estate price in Zhengzhou was rapid. In2001, the average sale price of commercial residential in Zhengzhou was1969yuan per square meter,and in2011, it reached5704yuan per square meter. Compared to the real estate market of the overall country, the Zhengzhou market had the similar characteristics. As a result, this article chose the data of Zhengzhou real estate market as the samples to study the real estate price formation mechanism.In this paper,the price formation mechanism of Zhengzhou real estate market is made as the research object, with the purpose of analyzing and proving the mechanism. This article is divided into six parts. Part one is the introduction of the whole thesis, which introduces the research background and significance, represents the research train of the thought and method, and at last points out the innovative points and limitation of this study. Part two is the literature review, which reviews and summarizes the theories and main achievements at home and abroad on the research of real estate price, in order to prepare for further analysis. Part three comes to the theory of the real estate price formation mechanism. It represents that the price of real estate is determined by the principle of profit maximization. In other words, the price is determined by marginal cost of fixed bonus, and the bonus number depends on the price elasticity of demand. Part four is empirical analysis of the price formation mechanism,which selects Zhengzhou real estate market as the object of study. Part five is further exploration according to the empirical results. It connects the results with the present regulatory policy and provides suggestion for reference, expecting to improve our real estate market in a degree. Part six is conclusions, which sum up the whole research of this article.The main conclusions and innovations of this paper are as follows.Firstly, the price of real estate market is determined by the principle of profit maximization. Secondly, according to a regression model and the method of economic metrology, research shows the number of the price elasticity of demand is2.667, that is to say, the power of the real estate market in Zhengzhou is0.374and the real estate price is1.6times as much as the cost. Thirdly, through empirical analysis, on the condition of fixed price elasticity of demand, the higher cost, the higher price, and the land cost is the most influential factor.Forth, one of the root cause of the rapid growth of real estate price is imperfect competition, and the measures with purpose to increase marginal cost are ineffective. The regulating and controlling of the real estate market should devote to restraining speculative demand and improving the degree of monopoly so as to raise the price elasticity of demand.