A study on the volatility of Shanghai residential property price during property cycle

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A study on the volatility of Shanghai residential property price during property cycle


Author: Yu, Luheng
Title: A study on the volatility of Shanghai residential property price during property cycle
Degree: M.Sc.
Year: 2014
Subject: Real estate business -- China -- Shanghai
Real property -- Prices -- China -- Shanghai
Real property -- China -- Shanghai
Hong Kong Polytechnic University -- Dissertations
Department: Faculty of Construction and Environment
Pages: 65 leaves : color illustrations ; 30 cm
Language: English
InnoPac Record: http://library.polyu.edu.hk/record=b2759214
URI: http://theses.lib.polyu.edu.hk/handle/200/7603
Abstract: Since 1983, China has promoted a sequence of land reform and housing system reform which increase local governments' fiscal revenue and activate residential housing market. The shanghai property market began to boost since this period and release strong energy during the coming thirty years. Started from 2003, cyclical volatility of property prices has being more obviously. Especially during the period of 2006 to 2011, the fluctuation amplitude exceeded any period in history which bring benefits as well as negative effects to the property market. Along with frequently volatility in the price, there also appeared the rapid increase of investment, bank capital, liquidity shocks, and the more and more severe real estate regulation policy. But excessive volatility of property prices will bring in macroeconomic risks no matter in the short or long term, so excessive volatility of real estate market should be avoided. This also explain why there is need to identify the elements can influent the volatility of Shanghai property market. Finding out the internal and external reasons of Shanghai property market volatility can provide solid theoretical support to the government for reference before they publish new policies. The developing process of residential property price volatility theory abroad can be roughly divided into three stages. Before the 1960s, concept of product market dominated the master status. The residential housing price volatility theory at this stage regarded residential property as consumer goods and viewed residential housing demand as a result of the macro factors. Is the second phase in the 1970 s, the stage of residential property have been not only regarded as consumer goods, but also treated as investments instruments. That is to say the housing market is divided into space and asset market. The factors affecting general asset markets have also been introduced into the research of the property price volatility. The third stage is the disequilibrium theory stage which has been present by Fair (1974). Domestic research of the housing market and property price volatility began in the 1980 s with use of previous three theories. But the quality of relevant researches were below the mark and existed limitations such as inadequate practical validation. This study will bring up hypothesis of both space market and asset market factors will effect shanghai property price volatility together and combine both quality method and quantity method like Four-Quadrant Model and regression model to verify the hypothesis. Figure out the relationship between independent variables from asset market and space market to provide support and suggestions in the theoretical level while government is making regulatory policies.

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