System Dynamics Based Research on Housing Market

With the reform of residential policies in China, housing market is of great concern to many people. Both from practitioners and academics are there a large body of researches on this issue, normatively and positively. This paper investigates into factors that influence housing prices based on present situations in China, and establishes a system dynamics model to explore the mechanism of the market. The model is composed of three sectors which are product sector, consumer sector and developer sector. Intra relationships within each sector and interactions between the sectors are described. The model established can be used to predict the behaviors of the housing market, as long as data are adequately available. Therefore, it can act as a support for government´s prudent policy issuing, developers´ informed investment decision, and consumers´ rational consumption.