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The Price of Housing Services in China Chao Yue Tian.

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Presentation on theme: "The Price of Housing Services in China Chao Yue Tian."— Presentation transcript:

1 The Price of Housing Services in China Chao Yue Tian

2 Organization of the Talk Background Literature and Purpose of the Paper Model and Empirical Strategy Results and Conclusions

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6 Concerns Housing Affordability Income Inequality Social Stability Bubbles in House Price

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9 Previous Research Changes in House Price Reflect Fundamentals –Wu (2002) –Shen and Liu (2004) Do Not –Li (2007)

10 Advantage of Data Land Price –Fong and Liu (2006) –Gao and Mao (2003) –Song and Gao (2007) –Yan (2006) –Kuang (2005)

11 Model--Demand

12 Model--Supply

13 Model--Market Clearing

14 Model--Reduced Form

15 Data Chinese Statistical Year Books ChinaDataOnline Time Series, Cross Sectional, Beijing, Tianjin, and Shanghai HPI, LPI, Wage, CPI, Pop, Inc, i

16 Panel Data Estimation Heterogeneity –One Way Fixed Effect –Random Effect

17 Panel Data Method

18 Empirical Model -- Reduced Form in Percentage

19 Breusch-Pagan/Cook-Weisberg Test and Ramsey RESET Test for Heteroskedasticity ModelsBreusch-Pagan / Cook-Weisberg testRamsey RESET test Prob > chi2Prob > F resi resi resi resi

20 Result OLS Favored Population and Income Wrong Sign and Insignificant Correlation between Land Price and House Price High

21 Disadvantage of Paper Small Sample –Reliability of Estimates –Could Hardly Account for Structural Breaks

22 Conclusion Our Results Confirm with More Recent Results on the Movement of House Price Appreciation Economic Fundamentals Do NOT Explain House Price Appreciations as Theory Predicted High Correlation between Land Price and House Price Indicates Developers Dominate Market

23 Suggestions Government Could Provide More Land to the Market Encourage Competition among Developers Raise Land Price


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