Shanghai Secondary Housing Purchases Restriction Analysis

Shanghai governments announced new Secondary Housing Purchases Restriction policy in March 2016 for controlling the extreme high housing price. The source of market failure is that the housing is a merit good, everyone needs a house for shelter. The objectives of these policies are welfare and equity, where trade-off of liberty. Low to middle income local families are the main stakeholders that support the policy, while real estate investors, wealthy families, and non-local residents oppose the policy. However, after the policies released, the housing price was keeping increasing in few months. Therefore, our finding is that only does the government release the circulation of lands and increase the development of low-rent housing, the supply can be elastic in the long term.