Housing Price Ripple Effect within Cities: A Perspective of Regional Economy Three-Sector Equilibrium Model

Abstract—With the financial crisis sweeping across the world, house prices of big cities in China such as Peking,Shenzhen and Shanghai are declining and the ones of small cities are considered to be downtrend in the future on the influence of housing price ripple effect from big cities. A choice must be made for adopting measures to harness the crisis that is whether to concentrate limited force on big cities or to share it out equally in all cities including middle and small cities Regional economy threesector equilibrium model is applied to analyse housing price ripple effect within cities and the research support the view to concentrate limited force on big cities. Owing to housing price ripple effect within cities,financial crisis always spreads from big cities to middle and small cities. The sequence should be taken use of to stablize the first card of dominoes -the house prices in big cities. Therefore, to stablize macroeconomy in China, it is important for the government to make more special policies just for big cities’house market. That means“savings big cities and not touching small cities”.