“Home ownership” is the dream of all Chinese people, many people even cannot have a house through their whole life. High housing and rental price is one of the most hot topics among the individual and the society. It reflects not only our many contradictions of our society, but also the inevitable result of the gap of wealth. High housing prices are indeed able to undermine the whole society. That’s why I plan to research the main reasons for this phenomenon and the resulting problems. And after that I will try to find out many probable solutions for these problems.
This study will draw on diverse approaches to the real estate in china. As Ahuja et al. (2010) states, the current levels of house prices do not seem significantly higher than would be justified by underlying fundamentals for the whole china. However, there are signs of overvaluation in some cities’ mass-market and luxury segments. Unlike advanced economies before 2007-8, prices have tended to correct frequently in China. Wang B (2010) points out that the factors that drive real estate prices are: sustained rapid growth, income growth accelerated; speed up the process of urbanization and the structural factors of our population; more lenient credit policies; yuan appreciation expectations. According to Zhong L. (2010), there are three possible reasons for the rapid growth of housing prices in china: first, the highly-educated young generation studies and works in big cities and has a strong desire to buy a house and raise a family in these most densely populated urban areas. Secondly, in order to maximize profits, many housing developers try to hold as much land as they can. Thirdly, the government does very little to control the housing market in order to maintain the country’s high rate of GDP growth. Wang B. (2010) states that too rapid growth in house prices triggered a real estate bubble. Besides, the recent rapid rise in china’s real estate prices continues to...
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