Research On Housing Quality Regulation

Housing is one of the most important consumer goods and investment goods inpeople’s daily life and its quality has an influential power over the security of people’slife and property. With the development of China’s urbanization and the booming of realestate market, massive housing projects are under constructed each year and a largenumber is being transacted on market and is coming into service. However, housingquality in China is not satisfying for a very long time and accidents related to housingquality are constantly emerging. Average consumers give great concern over housingquality but lack the necessary knowledge and equipment to learn the quality of thespecific house they purchase, which leads to the result that housing price does notreflect housing quality. Such serious asymmetric information concern housing qualitybetween house buyers and house sellers results in the widespread quality fraud on realestate market. In addition, real estate companies also lack the incentives to ensure andincrease housing quality because high quality usually does not guarantee high price orhigh profit due to such asymmetric information. Such specific feature of housing iscalling for a new housing quality regulation system to solve these problems.Traditional research on housing quality regulation concentrates on the constructionmarket, discusses the ways and methods to control and ensure housing quality duringthe construction process, while oversees the widespread asymmetric informationproblems during real estate transaction. In this dissertation, we discuss housing qualityregulation on both construction market and transaction market. First, this dissertationanalyzes the failure of the market and the private law based on asymmetric informationand unfair gaming and provides the theoretical foundation for the necessity ofgovernment intervention in housing quality regulation. Second, taking advantage ofprevious research on credence goods and model deduction, this dissertation analyzes thecredence goods character of housing product and quality fraud on real estate market andproposes that the housing quality evaluation system and housing quality informationdisclosure system are the key to correct the market failure resulted by asymmetricinformation and strengthen the incentives for real estate company to ensure and enhancehousing quality. For the construction market, this dissertation summarizes international and domestic research on housing quality regulation and the current housing regulationpolicy in China. Using information collected in expert interviews and surveys, thisdissertation analyzes common issues and problems on related agencies and practitionersin current housing quality regulation system, including the necessity of public lawintervention on housing quality regulation, the improper allocation of quality duty, thefailure to execute quality duty and the weakness in regulating practitioners. Thisdissertation also analyzes the specific problems of each duty party and participatingparty, proposes that duty guarantee system is crucial to ensure the execution of duty ofeach party. The duty guarantee system contains three parts, the incentive mechanism,the accountability system and credit system. In addition, this dissertation also makessuggestions on the government regulation pattern, law regulation systems, issuesconcerning shareholders of housing quality regulation, such as reinforcing the qualityduty of real estate companies, positioning quality supervisors as quality consultant andputting quality duty in in-service phase into practice by implementing inherent defectinsurance, etc.