ABSTRACT
Housing market fluctuations and price inflation are common problems faced by many countries in the world. This has also been the case in China, where in particular the urban housing market shows some distinct features. The Chinese urban housing market was established through a series of housing reform policies that commercialized the socialist welfare housing system in the late 1980s and the 1990s. Ever since its introduction, the urban housing market has been volatile, with short waves of spikes and troughs. To help control this volatility, government policy makers have alternatively used “adjustment and control” (调控) and “market rescuing’” (救市) over the last 15 years. Where market support policies were introduced in one year, the property market would overheat, followed by price inflation. The inflation would lead to adjustment and control policies that often resulted in property market slowdowns and a decline of property development activities and investment. The slowdown of the housing market would normally affect the general performance of the economy in cities and the country. A decline in the economic growth rate would force policy makers to support and rescue the property market through various financial, taxation, and administrative stimuli. The consequence of these alternatives of control and support policies was continuous housing price increases and the fast accumulation of family assets by rich urban residents.
