Important Facts, Reasons, and Explanations of the China’s Real Estate Market: The Perspectives of High Housing Prices and Investment

Abstract

This paper investigates the factors contributing to high housing prices in China’s real estate market and explores their economic implications. The study emphasizes the crucial role of the real estate sector in the national economy, significantly influencing investment patterns, consumer behavior, and overall economic stability. The analysis is divided into two primary perspectives: high housing prices driven by housing demand and real estate investment driven by investment demand. Key factors such as supply-demand imbalance, speculative buying, social attitudes towards property ownership, and population mobility are discussed comprehensively. Additionally, this paper examines both positive contemporaneous effects of real estate investment on economic growth through industry synergies and negative lag effects due to resource misallocation and market volatility. The findings underscore the necessity for policy measures aimed at curbing speculative trading activities, increasing investments in affordable housing options, and diversifying the economy to reduce over-reliance on real estate. This paper innovatively provides a systematic analysis of the causes behind high housing prices while addressing their impact on the economy, thereby filling research gaps in related fields. It also proposes policy recommendations for dealing with high house prices by curbing speculation activities, promoting investments in affordable housing options, and diversifying the economy. Ultimately, this study aims to offer stakeholders a comprehensive understanding of China’s dynamic real estate market dynamics along with practical recommendations for navigating challenges posed by high housing prices.