The impact of high house prices-essay代写

本文是一篇优秀的essay范文- The impact of high house prices，供大家赏析学习，这篇论文讨论了高房价带来的影响。房地产是中国经济的支柱产业之一，对我国的经济发展有着重大的影响。但近几年房价不断上涨，严重影响了国民经济的发展和人们的生活。现在的房地产市场几乎都被寡头垄断了，房价任他们操控。房价过高不仅影响了人们的生活水平，还在一定程度上破坏了社会的稳定。

Introduction

In twenty-first century, with the rapid development and urbanization of China's economy continues to improve, housing conditions have been greatly improved, and the demand for housing continues to increase. Since 2005, housing prices in most Chinese cities begin sustained rapid growth exceeded the capacity of ordinary people. The central government made relevant policies several times to control the house price but with little success. For most people, the housing price issue is an extremely sensitive issue, because house is directly related to the life happiness and warfare. In terms of macroeconomic, property and housing as part of fixed investment in GDP, it affects GDP, and thus to some extent affects the country's macroeconomic data. Furthermore, China's housing problem, not just economic issues, but also a social problem. Thus, the housing problem is one of the problems in today's society the public is most concerned about, but also the impact of the main problems of social development.

The reasons causing high prices

Unbalanced the relationship between supply and demand

For the market economy, the intersection of the supply curve and the demand curve is called the equilibrium point. When in equilibrium, trade can achieve clearing. Oversupply or shortage situation will not arise. However, when this equilibrium is destroyed, the associated price problems will arise.

For the supply side, the supply of housing land is special product that means is very limited resource, and thus its elasticity is quite small, and not because of increased demand and unlimited increase, especially in the short term. Thus, depending on the housing land, the elasticity of supply will be relatively small, with the construction of housing requires considerable time, short-term housing supply elasticity even smaller. For instance, in 2004, the state has decided to take the most stringent land conservation system, making a significant decline in the area of land acquisition and development area, the supply was significantly reduced(Brito&Perreira, 2012).

On the other hand, in recent years, with the increasing rapid development of China's economy and the urbanization level of people's living standard is constantly improving, so the demand for housing will grow rapidly. Especially in recent years, rapid and healthy development of China's economy, the rate of increase of housing supply lags far behind the rate of increase in housing demand, leading to a strong demand for housing, the performance of the demand curve outward movement as a whole(Fang, 2012). In addition, due to the rapid rise in demand caused a lot of speculation generated and further increases the demand for housing, resulting in excess demand situation(Burnside, 2013).

Monopoly in Property industry

Real estate development market can be seen asan oligopoly market.According to the characteristics of an oligopoly market, the decision both competitive but also conspiracy between rows oligopolistic firms, oligopolistic firms control the market size and the level of profits, depending on the behavior of the interaction between them is the way(Chau& Zou, 2010). Stronger competition if they could take the game way pricing to achieve equilibrium. In real estate oligopolistic market, differences in housing is very obvious, thus weakening the competition among real estate enterprisesto the substitution. As a result, the real estate enterprise has a considerable degree of market power, showing that they have greater pricing power. In order to get more profit, real estate enterprises unite price manipulation, the prices on maintaining a high degree of understanding, so that real estate enterprises seeking monopoly profits(Madsen, 2013). Faced with this situation, buyers have to come up with funds beyond their affordability to buy houses, which to some extent boost the housing prices skyrocketing.

Low deposit and lending rates

As the name suggests, it refers to the ratio of deposit and lending rates within the deposit or loan term and interest amount of the principal amount. China's interest rate has managed by the People's Bank of China unified. Low deposit and lending interest rates will reduce the motivation of deposit and increase the motivation loans. If the deposit and lending rates low, the loan to buy a house will become possible, particularly installments in this way, so many ordinary working people as consumers’ purchasing power is greatly increased, and thus lead to a further rise in demand for housing, making prices also followed up(Leung, 2013).

In addition, the increase in consumer purchasing power, and that the elasticity of demand is small, it is the impact of price changes on demand for housing becomes less significant, will not significantly alter the demand(Monetary Policy Analysis Office of People’s Bank of China, 2012). This is for the housing enterprise to get a good opportunity to increase profits. Lower deposit and lending rates, also means that short-term savings interest close to zero, we put the money to real estate market will be relatively strong, rather than money in the bank waiting to be devalued.

The impact of high housing prices

Housing prices are too high will not only to bring great impact on our lives has, but also had a significant impact on the government's decision.

It has serious impact on people's lives, some high prices will lead the ordinary residents fulfill the price and make people's living standards decline(Fang, 2015). This phenomenon is the increased risk the livelihood and social problems; it may exacerbate inequality and unfair distribution of housing, some impact on social stability.

Overheated real estate market for China's GDP is a certain leading role, as it is part of fixed investment in GDP. However, the overheated real estate industry will lead to an unhealthy development, making China's economic growth since the real estate too, bringing the imbalance of economic structure(National Bureau of Statistics, 2013). In addition, real estate prices continue to rise will make more consumers will choose by installments to meet their housing needs, which is a certain risk. Once the future debtors reach the expected level of real income, thereby reissue phenomenon repaid, there will be credit risk.

High prices will inevitably inhibit the growth of other consumer, leading to structural imbalances in the economy. Because prices are too high, consumers buy a house, buy other goods spending power reduced, the existence of such imbalances, will make the economy does not have Pareto efficiency(Lu, 2013).

Solutions to overcome the high housing price

As mentioned before, insufficient supply, resulting in rising prices when excess demand makes too fast, and thus lead to higher prices(Liu, 2012).In addition, to increase the protection of housing construction, increase the supply of affordable housing construction, and constantly improve housing policy, urban housing supply and housing security level means diversification, as far as possible to universal coverage of housing supply and security. In addition, to strengthen the low-rent housing and affordable housing construction and management to ensure that low-income families and sandwich mass housing problem can be a good solution.

National long-term low interest rate policy is an important reason for the real estate prices continued to rise. Can take the appropriate interest rate policy, which is appropriate to raise interest rates, even if the rate hike does not play, due to the decline in the rate of return on investment, it will inevitably lead to reduced investment demand, allowing investors to turn to other industries.

In addition, the government can increase the amount of down payment in installments, thereby reducing the total quantity to buy housing. You can also take a number of restrictive measures, such as restrictions on the number of loans to buy housing, and limited the purchase of housing copy number, to achieve the objective of reducing demand for housing.

Conclusion

Real estate as one of the pillar industry of China's economy, its sustainable and harmonious development of the rapid growth of the economic health of our country has very important significance. However, in recent years, rising house prices, the real estate market is almost always kept high, so that not only affected the development of the national economy, but also on people's lives had no small influence on society has caused tremendous losses. Its causes are many reasons, not only with the characteristics of the housing itself, but also with business activities, government policy and decision-making of the masses has a close relationship. Thus, the proposed measures and implement effective solutions to ensure the healthy development of China's real estate industry, has a very positive meaning.

Reference list

Brito, P. and Perreira A.M. (2012), Housing and Endogenous Long-Term Growth, Journal of Urban Economics, 51, 2, 246-271.

Burnside, C. (2013), Understanding Booms and Bustsin Housing Markets, Working Paper, Northwestern University.

Chau, K.W. and Zou, G. (2010), The Interaction between Economic Growth and Residential Investment. Working Paper, University of Hong Kong.

Fang, C. (2012), Emergence of Urban Poverty and Inequality in China: Evidence from Household Survey, China EconomicReview, 13, 4, 430-443.

Fang, H. (2015), Demystifying theChinese Housing Boom, forthcoming, NBER Macroeconomic Annual, 2015.

Leung, C. (2013), Economic Growth and Increasing Housing Price, Pacific Economic Review, forthcoming.

Liu, H. (2012), Government Intervention and the Performance of the Housing Sector in Urban China, Journal of the Asian Real Estate Society, 1,1, 127-149.

Lu, D. (2013), Rural-Urban Income Disparity: Impact of Growth, Allocative Efficiency, and Local Growth Welfare, China Economic Review, 13, 4, 419- 429.

Madsen, J. (2013), The Causality between Investment and Economic Growth, Economics Letters, 74, 2, 157-63.

Monetary Policy Analysis Office of People’s Bank of China. (2012), TheReport of Monetary Policy Execution.

National Bureau of Statistics.(2013), Statistics on Investment in Fixed Assets of China. China Statistical Press, Beijing.

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