Quantitative Analysis on the Relations Between Price of Real Estate and Urbanization Level in China

Price of real estate rises quickly in recent years. The problem of price of real estate has become the focus of attention. There are many impact factors to the real estate price. The relationship between supply and demand in real estate market is the essence factor. The urbanization level is one important factor of the demand of real estate. In this paper, co-integration analysis and Granger causality analysis are used to analyze the relations between price of real estate and urbanization level in China in the period of 1987-2007. Empirical results show that the improvement of China's real estate price is Granger cause of the level of urbanization in China. There is a long-term stable equilibrium between China's real estate price and the level of urbanization in China. The regression model shows that real estate price will increase by 30.298 units if the level of urbanization increases one unit. Finally, some suggestions are provided.