High Housing Prices, Rent-seeking And Anti-corruption

With the development of economy and society, real estate has become a pillar industry of national economy. However, with its rapid growth, it also brings a very serious social problem--high prices. The growth rate of house price has far exceeded the growth rate of wages. As a result, the people cannot afford the house. House is very important for people’s modern life, and the high price lead to the people cannot live in the society happily. Central and local governments are also aware of this issue, repeatedly introduced price control policies to inhibit the growth of house prices, but the effects is not ideal. Prices extremely high status will affect people’s lives, causing economic bubble, harm social stability. Many scholars study the high price of real estate. Like the theory of supply and demand, the theory of cost, the theory of excess liquidity theory, and some also analyze from the tax system, fiscal decentralization and consumer expectations theory. On the analysis of the causes of high prices, there is still no consensus academia.Since 2013, central committee conducted three rounds of inspection.21 local governments in the three rounds of inspection, there are 20 local governments found that corruption in the real estate industry. Many government officials surveyed are inextricably linked with the real estate industry. So the rent-seeking and corruption can lead to the high price of real estate.From the perspective of the real estate industry for rent-seeking, analyze the effects of rent seeking on the price of real estate. First of all, the status quo of China’s housing prices will be described. And from the price earnings ratio and the ratio of housing rental, we acknowledge that the price of real estate is irrational. Then we analyze the fundamental of rent-seeking of the real estate, and the behavior of rent-seeking.From that, we get the rent-seeking has the deeply fundamental in our real life and the behavior is full of the society. Based on the fundamental of rent-seeking, we build a theoretical model, study the influence of rent-seeking market on the demand-supply market. And the result reveals that the rent-seeking can raise the house price. Further, in order to verify the theory, we use the data about the province form 2006 to 2012 to finish the study. However, the rent-seeking behavior has a natural concealment, so the data about the rent-seeking is difficult to get. Firstly, we use the real estate business tax proportion of total expenditure of local government to measure the rent-seeking behavior. And the results reveal that the rent-seeking behavior enhance the price of house. Then we turn to the opposite view--the anti-corruption to analyze the relationship between anti-corruption and the price of real estate. The data tells us that the anti-corruption can curb the price of real estates. What’s more, we study that if the environment of law is better in its area, the anti-corruption can make the house price decline more. From the above results about the theory and the empirical, we get the conclusion about our study. Then we give some policy recommendations.