The efficiency of chinese housing market - An empirical investigation based on EMH theory

Abstract

High housing price is a severe problem in current Chinese residential market. Prices might deviate far away from their intrinsic values, and they could not reveal correct and ample information of housing market. According to efficient market hypothesis, such market is defined as inefficient market. Thus, this thesis attempts to determine the efficiency level of current Chinese housing market by quantitative method, and ten sample cities are chosen to demonstrate the problem. According to the results, half of sampling cities have reached weak-form efficiency. And it has been found that high prices do not certainly lead to the conclusion of market inefficiency. It is the marketization levels that play a more important role in market efficiency. In addition, a space diffusion clue has been found in neighboring samples, which provides a possible suggestion for government to make housing policies in order to build mature and healthy housing market.