Determinants and Sustainability of House Prices: The Case of Shanghai, China

Sustainability

Gao Lu Zou¹  Kwong Wing Chau² 

[1] Faculty of Tourism and Industrial Development, Chengdu University, Chengdu 610106, China;The Ronald Coase Centre for Property Rights Research, Faculty of Architecture, The University of Hong Kong, Hong Kong, China; E-Mail:

关键词: break date;    broad money;    cointegration;    Engle–Granger test;    exogeneity;    Granger causality;    inflation;    sales;    sustainable house price;    trace test;   

DOI  :  10.3390/su7044524

来源: mdpi

【 摘 要 】

Recent housing policies include measures for home purchase control and shanty town redevelopment. This study proposes sustainable pricing, in that the long-run equilibrium price is determined by the fundamentals of house prices. We argue that changes in CPI might have led to rapidly growing house prices and rather high price levels. We investigate the long-run or short-run impacts of new commodity housing completions, transacted square meters of commodity housing, and CPI for house prices in Shanghai. We adopt monthly data for the period of 2005–2010. We test for unit roots using both the ADF and PP techniques and structural breaks using both the Zivot-Andrews (Model B) and Perron (Model C) methods. Considering Cheung-Lai and Reinsel–Ahn finite-sample corrections, the results suggest a long-run equilibrium. Housing completions negatively impact house prices in the short run. A positive volume-price relationship is suggested. Housing sales affect house prices in the short run but not vice versa. Hence, the empirical evidence supports the search model. In addition, CPI is strongly exogenous with respect to the long-run relationship and thus is a long-term determinant of house prices. CPI also positively and drastically influences house prices in the short run. Therefore, a reduction in inflation rate could stabilize house prices, increasing the chances of sustainable prices in the future.

【 授权许可】

CC BY   
© 2015 by the authors; licensee MDPI, Basel, Switzerland.