Applying an intertemporal optimization model proposed by Aizenman and Marion (1991), this research quantifies instability in the Chinese housing market. Although the Chinese government established numerous real estate policies to ensure the stability of the housing market, the regression analyses indicate that housing policies had no significant impact on the stabilization of the Chinese housing market. Alternatively, macroeconomic factors are identified as significant explanatory variables to the instability of housing prices. In addition, this research computes the median multiple for major cities in China and provides an alternative means of investigating the abnormal housing price situation in China.
"An Economic Analysis of Housing Market instability and Affordability in China,"
Undergraduate Economic Review: Vol. 11
, Article 5.
Available at: http://digitalcommons.iwu.edu/uer/vol11/iss1/5