The Evaluation of the Health of Chinese Real Estate Market: Empirical Research based on index clustering and AHP

Since the reform of the housing system in 1998, China's housing industry has developed vigorously, and the real estate market's output and prices have rocketed, hence becoming a key engine for economic growth. Compared with developed countries such as the United Kingdom and the United States, the Chinese real estate market has a much shorter history of development. In the infancy stage of Chinese real estate market, there existed various problems in the market, i.e., the continuous rise in housing prices, housing bubbles, land finance, "ghost cities", etc, which have seriously affected the long-term stable development of Chinese real estate market. In 2003, the "Circular of the State Council on Promoting the Continuous and Healthy Development of the Real Estate Markets" first proposed that "The significance of the continuous and healthy development of the real estate markets shall be fully understood. " Since then, China has put forward the concept "health of the real estate market", and the government has frequently issued various measures for macro-control, but they have little effect. One of the principle reasons for the ineffectiveness of multiple housing macro-control policies is the lack of systematic research on the fundamental question of what is meant by a healthy real estate market. Therefore, research on the health of the real estate market has become an important issue that needs to be resolved urgently in the field of macroeconomics and policies in China. This research defines the health of the real estate market, applies theories in macroeconomics, real estate economics and public policies, uses quantitative analysis tools such as analytic hierarchy process and regression analysis, refers to existing research both in China and abroad, considers the characteristics of the domestic real estate market, and strives to establish a system for evaluating the health of the Chinese real estate market. Taking the comprehensive data of 35 large and medium-sized cities' real estate markets commonly recorded in the national real estate control statistics as samples, cluster analysis and analytic hierarchy process are used to comprehensively evaluate the health of the Chinese real estate market. From research, it is found that the Chinese real estate market in the 15 years from 2004 to 2018 (which involve the 10 years when the real estate market has been intensively regulated by government policies), tends to be in the normal range as a whole, with the exception of 2004 and 2014 when there was a "slightly cold" situation, and 2010 when the market was "slightly hot". With the central government's policies encouraging development of the real estate market, it has gradually become a pillar industry of the national economy, and formed a close symbiotic relationship with the macroeconomy. This research also emphasizes the importance of persisting in regulations of the housing market and provides suggestions on perfecting the real estate market policy regulation system. The health index of the real estate market of China and important cities derived can provide quantitative analysis tools for national real estate macro-control and promote the sustainable and healthy development of the real estate market.