Study on Housing Prices and Affordability in Some Selected Cities in China

Great differences in urban housing prices between cities in China have led to the imbalances of housing affordability. This paper will study on this phenomenon and put forward some reasonable suggestions. This paper carries out the empirical analysis with the panel data method and FMOLS model. Results show that: although there was long-term equilibrium relationship between household disposable incomes and housing prices on the whole, the stability was very weak. Meanwhile, there was bilateral causality between household disposable incomes and housing prices. Even more important is that the city's other factors, such as food consumption, education, health care, transportation facilities, communications and so on, also play important part in fluctuation of housing prices. Therefore, policy makers should take measures of balanced regional development strategy to balance the housing affordability between cities.