Abstract
By using panel data of 31 provinces or cities during 1998-2012 in China, this paper measured the housing market demand elasticity. Different from the previous related research, we considered the impact of housing price expectations on housing demand and distinguished between the housing consumption demand price elasticity and investment demand price elasticity. The results showed that there were differences in different regions on housing market demand elasticity such as price elasticity of housing consumption demand, price elasticity of housing investment demand and housing demand income elasticity, etc. The results could provide useful suggestions on regulating the real estate by the Chinese government.
Highlights
Since real estate was taken as a pillar industry of the national economy, many scholars have measured the housing market demand elasticity in China
Based on the above two points, we think the size of the elasticity of demand of housing market in China measured by these studies is questionable, because these scholars may be missing the key variable in setting the econometric model of the housing demand, which leads to the conclusion is not reliable
Because housing demand can be divided into consumption demand and investment demand, we defined α1 as price elasticity of housing consumption demand and α2 as price elasticity of housing investment demand
Summary
Since real estate was taken as a pillar industry of the national economy, many scholars have measured the housing market demand elasticity in China. Liang Yunfang [2], by using the state space model, concludes that nearly a decade from 2002 to 2012 in China the house price elasticity of demand is positive They think the result which is contrary to theory that price elasticity of demand is negative shows the housing has the dual nature of consumption goods and investment characteristics at the same time. Some scholars does not consider the factors affecting housing demand such as consumer’ expectation on housing price or lending rate when they construct the econometric model of housing demand. Based on the above two points, we think the size of the elasticity of demand of housing market in China measured by these studies is questionable, because these scholars may be missing the key variable in setting the econometric model of the housing demand, which leads to the conclusion is not reliable. These results will provide beneficial advice for Chinese government to make reasonable housing policies
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