After the reform of the housing system of China in 1998, the housing demand increases dramatically. In response of the demand increase, huge housing market problems are followed, such as market's supply and the demand for houses of the people, resulting in new residential issues. These problems are mainly portrayed more intensively in the imbalance between supply and demand, which is the supply shortage and severely less housing supply especially in small area around Shanghai. It has initiated high house prices and Shanghai residents suffered from lack of purchasing power in the housing market. Based on this market situation in Shanghai, future demand for house construction is one of urgent matters the Shanghai City government should resolve as a first priority.
In order to accomplish the purpose, the Mankiw and Weil model (M-W model) is used in this research to study the relationship of population ages and the housing demand in Shanghai and to predict the housing demand of Shanghai in 2020. The demand for housing sizes showing housing preferences and people living standard in Shanghai is analyzed through questionnaires. Based on the survey results, the amount of new housing units during 2010 to 2020 is calculated.
The research results show that the estimated demand for residential land and housing units is much higher than what the Shanghai government expected. The estimated amount of residential land for 2011-2020 is 246㎢. It is the amount of 7 new towns to be developed in the period, using average size of Chinese new towns. It also means Shanghai need 21 Bundang-size new towns to be developed in 10 years after 2011.