For local governments, they have multiple goals when ruling their districts, including helping generate economic growth, providing social stability and many others. One goal for many Chinese local governments is to stabilize their local housing market prices, which conflicts other goals.
To understand the conflict, it is important to understand what factors will add upward pressure on housing market prices. An increase in demand or a decrease in supply will add upward pressure on housing market prices. Since the land is a fixed supply, it is only possible to see an increase in demand to add upward pressure on housing market prices. An increase in demand is often caused by an increase in the population size. Usually people move to a city because of economic reasons or lifestyle reasons. Economic reasons include more job opportunities, higher wages and others; lifestyle reasons include cleaner environment, beautiful landscape and others. These economic and lifestyle environments do not only attract more people, but are also things that the local governments want to achieve. If the local governments successful increase economic opportunities and (or) improve environmental conditions such as lowering air pollution and water pollution, the housing market prices in such areas will increase dramatically due to the increased attractiveness to people.
Therefore, there is some sort of conflict between the local governments' goal to stabilize housing market prices and their other goals.
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