TITLE:
The Analysis of the Housing Markets in Beijing and Washington, 2005-2014
AUTHORS:
Xintong Yao
KEYWORDS:
Housing Markets, Beijing, Washington
JOURNAL NAME:
Modern Economy,
Vol.6 No.10,
October
30,
2015
ABSTRACT: Since the economic
reform of the late 1970s, China has achieved a magnificent economic growth. China’s
socialist market economy has become the world’s second largest economy by
nominal GDP, reaching 10,380 billion dollars and holding a 13.43 percent share
of global GDP. The dramatic growth of economy also has boosted the development
of Chinese housing market. But the question remains: Is the Chinese real estate
market developing in a positive way? This paper first compares the housing
prices in Washington and Beijing using hypothesis test for population means and
linear regression model. It is found that despite China’s low housing price in
early years, the average housing prices are almost the same in Beijing and
Washington area. The most reasonable proposal is that the personal income in
Beijing is higher. However, the data and the line chart illustrate that the
opposite is actually true. Therefore, in order to further explore the reasons
behind the high housing prices in Beijing, the paper then statistically analyzes
a series of factors, including per capita income, limited land resources, city
functions, unbalanced regional development, the influence of cultural
traditions, the government policies, the structure of housing supply, and the
investment demand. The last part of the paper points out the problems of the
Chinese housing market by looking at the housing price to income ratio and the
economic growth trend. The result shows that Chinese housing price has far
exceeded common people’s affordability, which has the potential to cause social
instability.