Chapter 3. Methodology – data collection
3.1 Factors influence the housing price
The housing price reflects the market value of the real estate in a specific time period. It is unreasonable using the average sales price represent the housing price over period. Housing price index (HPI) is usually used to calculate the housing price change situation. HPI is a relative percentile number that reflects the housing sale price change trends in a certain period, including many kinds of house types. In China, for example, HPI includes commercial housing, public housing and private housing. HPI is a comparable index which could eliminate the influence of house quality and building structure. There are two key index reflecting residence the housing price, housing sales price index and anticipate housing sale index, including their change rate.
As an important component of the virtual economy, the real estate market, i.e. the housing price, can be affected by various factors, e.g. the gross domestic product, different policies of the central bank, inflation rate, the speculative action of real estate markets, changes of the exchange rate, tax policies, house location, land control policies, consumer price index (CPI), interest rate, the supply and demand situation of the real estate market and the difference of income between urban areas and rural areas.
Bank interest rate could affect the housing price. From the cost aspect, the increase of interest rates would increase the investment interest of the real estate development operation, thus enhances a rising trend of the housing price. However, from the supply and demand aspect, most people buy real estate by loan, especially commercial residential house, so that the increase of interest rate would on the other hand cause a decline trend on the housing price.