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House Price Dynamics: Evidence from Beijing

Author

Listed:
  • Jinhai Yan

    (School of Public Affairs, Xiamen University, Xiamen 361005, China)

  • Lei Feng

    (Department of Land and Real Estate Management, School of Public Administration, Renmin University of China, Beijing 100872, China)

  • Helen X. H. Bao

    (Department of Land Economy, University of Cambridge, Cambridge CB39EP, UK)

Abstract

To study the house price dynamics in China, this paper extends the traditional life-cycle model by incorporating land supply, regime shifts and government regulation factors. The models are estimated with an error correction framework using quarterly data from 2000 to 2007 in Beijing. The conclusions are as follows. (1) There exits a stable co-integration relationship between house price and fundamentals; land supply and financial regimes are also important determinants of long-run equilibrium house prices. (2) Short-run dynamics depend on changes of fundamentals and the adjustment process of housing market. Land supply has a significant impact on house price fluctuations while demand factors such as user costs, income and residential mortgage loan have greater influences. The adjustment speed of real house prices to the long-run equilibrium has been reduced significantly since 2005 which means exogenous shocks can cause prolonged deviation of real house prices from the equilibrium level.

Suggested Citation

  • Jinhai Yan & Lei Feng & Helen X. H. Bao, 2010. "House Price Dynamics: Evidence from Beijing," Frontiers of Economics in China-Selected Publications from Chinese Universities, Higher Education Press, vol. 5(1), pages 52-68, March.
    • Handle: RePEc:fec:journl:v:5:y:2010:i:1:p:52-68
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    File URL: http://journal.hep.com.cn/fec/EN/10.1007/s11459-010-0003-6
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    Citations

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    Cited by:

    1. Nik Mohd Sukrri, Nik Nor Amalina & Abd. Wahab, Norazlina & Mohd. Yusof, Rosylin, 2019. "Constructing an Enhanced House Price Index Model: Empirical Evidence," Jurnal Ekonomi Malaysia, Faculty of Economics and Business, Universiti Kebangsaan Malaysia, vol. 53(3), pages 117-128.
    2. Ng, Eric C.Y., 2015. "Housing market dynamics in China: Findings from an estimated DSGE model," Journal of Housing Economics, Elsevier, vol. 29(C), pages 26-40.
    3. Hrushikesh Mallick & Mantu Kumar Mahalik, 2012. "Fundamental or speculative factors in the housing markets of emerging economies? Some lessons from China," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 15(1), pages 57-67, March.
    4. Li, Lixing & Wu, Xiaoyu, 2019. "Housing price and intergenerational co-residence in urban China," Journal of Housing Economics, Elsevier, vol. 45(C), pages 1-1.

    More about this item

    Keywords

    house prices; house price dynamics; regime shifts; macro-regulation;
    All these keywords.

    JEL classification:

    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets
    • R38 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Government Policy

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