Housing market and urban growth in China: what are the factors affecting housing prices?

Sammanfattning: A rapid urbanization process facilitated an enormous expansion of the cities and stimulated the development of the urban housing markets in China. The primary purpose of this thesis is to find factors influencing the urban housing prices. Based on the supply and demand theory, I examine housing prices in 95 cities in 2010 related to population growth, wages, manufacturing employment, human capital, pollution, and housing investment using a cross section data analysis. The empirical results indicate that all those factors are significantly related to the housing prices. I focus on population growth, a proxy for the urbanization process, as the core determinant to analyze housing prices in China. In addition, the results also find that cities located in the eastern area have averagely a higher productivity than the ones located in the mid-west, and the higher housing prices in the eastern area are explained by the higher level of population growth and wages.