Real Estate Industry, Financial Markets and Economic Development

PI: Robert M. Townsend (Department of Economics, MIT)

Abstract

We propose to study the real estate sector in China, as integrated with the financial sector. As a first step, we plan to utilize Chinese real estate, finance and economic data to build a data archive and visualization tool.  Then with the help of this tool, we will run analyses to explore factors that fundamentally drove the housing prices in China in the last decade.

We will obtain access to various data sets, incorporate them into an archive, develop a roadmap of linkages among the datasets, and then build a visualization tool—a GIS website for Chinese indicators. This comprehensive geo-referenced data archive will greatly ease the incorporation and integration of data from different sectors and different regions and be capable of displaying spatial-temporal patterns conveniently.

The data analysis specifically tries to answer the question of whether the recent rapidly increasing housing prices in China resulted from the residence demands of households, or their inability to achieve high returns to savings in the financial market. Employing multiple analytical approaches including discrete choice models, and with comprehensive indicators from real estate, finance and demographics, we will quantify the contribution of supply-side and demand-side factors to the Chinese housing prices changes.