Housing market system and policy experiment: an empirical case in Shenzhen

Abstract

This paper attempts to apply system dynamic technique to solve the problems of market forecasting and policy experiments. By constructing a dynamic system to depict the housing market mechanism, our study provides a tool to investigate how different housing policies will influence the market simultaneously. In addition, with an empirical case of Shenzhen, a major city of southern China, we illustrate how our system performs in real world. The error between predicted housing prices and real housing prices can be reduced to merely 8.72%; and we also show how the Shenzhen Government analyse housing policy before execution.