Price Driving Factors Of The Real Estate Industry

Since1998, when the house reforming start, the rapid development of China’sproperty market has become a pillar industry. During the past twelve years, China’sreal estate market gradually matured, moving towards a market-oriented. It can besaid that the past decade is the golden years of the real estate.In this high-marginindustry, China has a large number of real estate tycoons. However, when we admitthe recognition of real estate make a great contribution to China’s economy, weshould also see the other side of it at the same time--the real estate profiteering andnon-effective demand, real estate speculation, the coexistence of high prices, housingprices soaring make common residents can’t burden, more and more accumulatedproperty bubble face the risk of rupture. These problems are the results of unhealthydevelopment of the real estate industry, and will affect the sustained and healthydevelopment of real estate and the entire national economy.In order to solve the problem of high prices, this paper reviewed the the pastdecade history of real estate development and studied the relevant data, find twoimportant factors affect the house price, that is land and financial policies. Then wefind the conclusion that land policy and monetary policy affects the house prices byusing VEC model to research the1998-2010real estate price index, price index ofland transactions and the actual interest rate quarterly data. Besides, lag characteristicsderived from the related model tell us house prices, land policy and monetary policyinteracts with each other persistently.This is why the effective price regulation mustbe sustained and comprehensive. Finally, this paper offer some suggestions to China’sreal estate regulation.