The house price in China has risen dramatically recently,which has brought huge attention from both the governmental and academic circles.The present paper constructs an early-warning model that is capable of forecasting,and estimates the model using monthly Beijing data.We find that the current house price is closely related to the house price of last period and the house price of the same period last year;meanwhile,the house price is also influenced strongly by the land cost,vacancy area and disposable income of city residents,among other factors.The empirical analysis shows that the housing market in Beijing is basically normally developed.It was overheated in 1997, and in 2005 the house price was relatively high but not overheated.
The dramatic rise of house prices in many cities of China has brought huge attention from both the governmental and academic circles.There is a huge debate on whether the increasing house prices are driven by market fundamentals or just by speculation.Like Levin and Wright(1997a,1997b),we decompose house prices in China into fundamental and nonfundamental components and demonstrate that the nonfundamental prat contributes a relatively small proportion of the rise of house prices in China.
