Urban residential housing price dynamics and the role of foreign investment in China before and after Document No 171, 2000-2010

The real price per square meter of the urban residential house in China had increased by 109.14% from 2000 to 2010. The rapidly growing housing prices have drawn great attention. Numerous policies and legislations have been launched by the central government to stabilize the urban residential housing market, including an ongoing policy "The Regulation on Foreign Assets Access to the Real Estate Market", aka Document No. 171. This policy regulates the participation of foreign investment in the market. But media and scholars criticize Document No. 171 has only political impact and it barely contributes on stabilizing the real housing prices. This paper examines the influence of real foreign investment on real urban housing prices before and after the implementation of Document No. 171. The results support the criticism: economically speaking, the policy has no contribution on stabilizing China' urban residential housing prices and it may worsen current situation.