A study of Shenzhen real estate confidence index

Abstract

As an important indicator to reflect the development and the trend of Real Estate Market (REM), the Real Estate Confidence Index (RECI) has been widely used in developed countries and areas all over the world. In Shenzhen, a young metropolis adjacent to Hong Kong, the REM has been blooming with the emerging market mechanism accompanied by large-scale urban development in the past near 30 years; meanwhile, the Shenzhen City Council has noticed that it is becoming extremely necessary to introduce RECI for governors to monitor and control the price changing in the local REM. As there has been no available RECI or any relevant research in mainland China, this research aims to set up the theory of Shenzhen Real Estate Confidence Index (SRE Index). To achieve this target, this dissertation focuses on the mechanism and methodology of the proposed SRE Index, from which the situation, the problem and the method for setting up and applying RECI for the Shenzhen REM will all be discussed in terms of relevant research results in other developed countries and areas. According to the mechanism and methodology of the SRE Index, sub-indexes are used to respectively reflect conditional items in regard to three technical aspects, including effective demand and supply, potential demand, and potential supply; in addition, a mathematical model is then put forward to integrate individual sub-index for calculating the SRE Index. A case study is finally used to demonstrate how to use the SRE Index in practice.