Determinants of Housing Prices

By comparing housing prices for major cities since 1998 housing reform in China, the study finds enormous housing prices appreciation. The research aims to investigate the major determinants affecting housing prices in the 35 large cities in China from 2003 to 2018. Based on panel data set of 560 observations on four variables, the research compared three regression models, including regular ordinary least square, fixed-effects with least squares dummy variable, and random-effects. The main determinants are land price from the supply sector, and GDP per capita, disposable income per capita, population density from the demand sector. The regional difference is studied by adding regional dummy variables, including the eastern, western, northeast, and middle area in the model. The results have further policy recommendations regarding homeownership, fiscal revenue, and income support.