A Study of Chinese Economic Fundamentals and Housing Prices Based on Spatial-temporal Analysis

Many factors of economic fundamentals can influence housing prices. Economic fundamentals have a long term relationship with housing prices. There are many researchers that studies this. However, many existing studies only use one regression, and do not describe the true value of real estate prices fully. Many regressions only consider the temporal characters and ignore the spatial characters. In economic fundamentals we studied the relationship between GDP, INCOME, CPI, POP and housing prices. This paper uses housing price observations during 1997-2007 from 31 Chinese provinces.-It demonstrated the substantial benefits obtained by modeling the spatial as well as the temporal dependent variations. This paper will integrate and decompose a weight matrix. Based on the geographical location of the 31 provinces and get an initial spatial matrix. Using the spatial matrix, we can eliminate the spatial impact. After that we built a model. Finally this paper proposes some suggestions on how to control real estate prices.