Research On The Impact Of House Price Changes On Household Consumption In China

The economy in China develops fast recently, but the consumption of residence does not grow accordingly, which slows down the development of Chinese economy to a large extent and becomes a significant problem in our economy. According to the situation, Solving the problem of low residential consumption becomes more and more important, which gives it great significance to study the elements influencing the consumption, how and to what extent do they affect the consumption.Since the revolution of the real state market in 1998, the real state industry grows very quickly, which become a relied-on industry from an ordinary industry. The booming of the house price becomes a hot topic among residence. The price of houses keeps growing for recent years, but in some cities, the quantities of the houses sold are declining, which makes the future change of the houses'prices not clear.According to economic theory, one of the most important elements which influence people's consumption is the wealth, the more the wealth people have, the more the consumption. In China, the most expansive wealth people have is houses, and the expenses on houses account a great deal during their whole lives, the change of houses'price influence not only people's wealth but also increase the savings of the people who save for the house and spend less on consumption. so the direction of influence of the change of houses'prices to consumption is uncertain.This article studies how the changes of house prices affect residential consumption, and use the data to test whether the influence are significant, and what is the direction of this influence.This article use theoretical and empirical methods to study the influence of the change of the houses'price to consumption. First it studied the reason why the price of houses in our country grows so fast, and how this phenomena affects consumption, second we use the vector autoregression model and data from quarter one in 1999 to quarter four in 2009, to estimate this influence, then we use impulse response function and variance decomposition to test the significance of the influence and the way these factors influence consumption. we draw the conclusion, The results show that in our country, the effect of the house prices on household consumption does not show the wealth effect, but show that the grow of the house price slow down the consumption, but the effect is not great. Income remains the most important factor on consumption. Then we give the explanation according to the situation of our country, this article also give some advices to solve the problem.