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Title:: Analysis of determinants of real estate prices in China based on Bayesian Model Averaging(BMA)

Author(s):: LU Er-po; ZHANG Chao; Institute of Statistics and Applied Mathematics, Anhui University of Finance and Economics, Bengbu 233030, Anhui, China

Keywords:: real estate prices; bayesian model averaging method; determinants; psychological expectation;  credit policy; industrial structure

Abstract:: This paper identified and checked the determinants of real estate prices in China, and adopted thirty provinces (autonomous regions) panel data from 2002 to 2013 to do model specification and analysis by use of bayesian model averaging method from the perspective of model uncertainty. The results show that in the nineteen factors of five levels that may have an impact on Chinas real estate prices, the posterior probability of five variables is more than 90%, which are credit policy, psychological expectations, price levels, completion of housing area, and the rationalization of the industrial structure. They are the determinants of China’s real estate prices at the present stage. Therefore, in order to promote the good development of China’s real estate market, differential credit policy should be adopted to control real estate price according to different zones, the real estate data should be collected publicly and published via the media to lead masses’ psychological expectation, appropriate monetary policy should be made to control prices levels effectively, indemnificatory housing should be increased to meet the real estate supply, and industrial structure rationalization should be improved to adjust housing price. 