Housing paper.docx - 1 Introduction In the late 1980s the Chinese housing market was about to change due to the commercialization of the residential

Housing paper.docx - 1 Introduction In the late 1980s the...

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1. Introduction In the late 1980s the Chinese housing market was about to change due to the commercialization of the residential housing in urban areas, the price of houses rapidly increased, but this pattern of growing was just starting, nowadays the annual growth rate is 9.2 and increasing. The Chinese govertment has being concern about such price increases. At times the government attempted to regulate the housing market because it believed that the rise in price was due to speculation. The main purpose of this paper is to show that the price of urban housing in China is determined mainly by the basic economic forces of demand and supply. ¨If the price increase is partly due to the upward shift in demand resulting from the rapid increase in disposable income, and partly due to the upward shift in the supply curve resulting from the rapid increase in construction cost, any government interference of the market price will lead to inefficient allocation of resources in the housing market. Furthermore,
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  • Fall '19
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