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China's Housing Market Imbalance from 2003 to 2016: An Analysis Based on the User Cost Approach
Author(s) -
Lai Pingyao
Publication year - 2017
Publication title -
china and world economy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.815
H-Index - 28
eISSN - 1749-124X
pISSN - 1671-2234
DOI - 10.1111/cwe.12205
Subject(s) - possession (linguistics) , china , economics , property market , government (linguistics) , monetary economics , business , market economy , finance , philosophy , linguistics , real estate , political science , law
During 2003–2016, China experienced an unprecedented housing market imbalance. The present paper applies the user cost approach to conduct a systematic analysis of this important phenomenon, examines the policy factors behind the persistent housing market imbalance, and explores policy options to correct the housing market imbalance. We found that during most of 2003–2016, the user cost was significantly lower than 2 percent, caused by high income growth, rapid credit expansion and low interest rates, which led to the persistent housing market imbalance. Therefore, the government should control bank credit and introduce property taxes during the possession of houses.