Regulations on Housing Market and the Housing Prices in China: A Supply-Demand Analysis and its Empirical Test

Housing prices continue to rise every month in China, real estate is highly overinvested. In order to control housing price rises, the central government announces some property control policies at set intervals, yet the housing market performance shows that the policies do not go into effect. In fact, many factors can influence the housing demand and supply. Thus in this paper we hypothesize that, influenced by these factors, the housing demand curve will shift to the right substantially and the supply curve will shift to the right slightly, then the housing price will continue to rise every month. After empirical tests, we can conclude that the hypotheses are true, the housing demand changed more greatly than the housing supply from 1998 to 2011. The government should end land finance, deregulate land supply and encourage individuals to develop the housing project, and then the housing supply will increase greatly and the price will lower effectively.