Study On The Spatial And Temporal Diffusion Of Urban House Prices In East China

As one of the fastest economy growing and most dynamic regions in China, whether East China’s real estate market has healthy development or not affects national real estate market. House price change trend in recent years shows price fluctuations of seven provinces in East China are more closely linked. However, there is a lack of empirical research for the spatial and temporal diffusion of urban house prices in East China. In view of the background, this paper focuses on the the spatial and temporal diffusion and examine the impact of price fluctuation of Shanghai and Hangzhou.Based on the average residential price of 18 cities from January 2008 through February 2015 in East China, this paper assumes Shanghai and Hangzhou as the prices diffusion center city, the long-term equilibrium relationship of house prices between the supposed city and other cities is discussed by bivariate VAR model firstly. Secondly, spatial vector error correction model is established with three different spatial weights matrix, such as geographic distance, neighbor relation and economic distance, to analysis the spatial and temporal diffusion and if Shanghai and Hangzhou are price diffusion center cities. Then, assuming every city as a diffusion center city, all data is compared to inspect if the price dominant city exists. Thirdly, the effect of shocks from Shanghai and Hangzhou are tracked using generalised spatio-temporal impulse responses. Finally, this paper tries to uncover possible reasons for house price diffusion in East China through literature theory and the results of empirical research.This study mainly draws the following four conclusions:(1) Shanghai and Hangzhou affect house prices in other cities significantly, are the prices diffusion center cities.(2) The spatial and temporal diffusion exists in East China definitely and be more obvious when it assumes Shanghai as the diffusion center city. (3) Compared with Shanghai, Hangzhou has greater and longer impact to other cities. House price impact spreads to similar cities in economic level in the early. (4) Transportation accessibility, economic ties, information dissemination could explain house price diffusion in East China but migration flows have little impact.