On the demand factors of Chinese real estate price's rise

The Chinese real estate's continuous rise has caused wide public concern. In this paper we analyze the demand-side of the real estate, we divide the price's increase to consuming-directed period and investing-directed period. After discussing the demand-side factors, we built a ECM model of the real estate price and urban people's income. By Chow Test we found the Chinese real estate's breakpoint took place in August, 2005. The VAR model tells us the rise after the breakpoint was mainly caused by the investment under the financial support. To control the price's increasing overly, we suggest the Chinese government should refer to the experience of foreign countries, and build a circular system of economic and suitable houses to tell consuming demand from investment demand and to press the speculative bubbles. We also suggest China to distinguish the real estate policy from the housing policy, and perfect the housing supporting system.