Study on the Economic Effect of Affordable Housing on the Housing Commodity Market

Abstract

Firstly, the mechanism that affordable housing affected demand, supply and price of housing commodity was analyzed by economic theory, then VER models were created and the effect that affordable housing affected housing demand, land supply and housing price was analyzed by the methods of impulse response function and variance decomposition. An empirical analysis was conducted using the data of Chongqing from 1995 to 2010 and concluded that affordable housing had the positive impact on housing demand, negative-positive impact on land supply, and negative impact on housing price. However from the point of contribution rate, the impact of affordable housing on housing demand, supply and price was little. Finally some suggestions were made that the government should improve construction scale of affordable housing and try to satisfy housing demand of low-income families, which would cause crowing-out effect of housing demand and price.