Empirical Research About The Influence Of Monetary Policy On The Price Of Real Estates

Real estate industry has developed for many years. It is becoming a important role in Chinese economy since the policy of housing reform has been taken. But in recent years, the price of real estate has been growing so fast that, has not only caused serious social problems and brought great hidden dangers for swing in macroeconomic as well. In 2007 the American subprime crisis caused by real estate market, leading into global financial crisis has remind of us that:real estate is an important asset, its dual nature of physical assets and virtual assets, and the fluctuating of real estate's price link with the macroeconomic more closely. In this case study about the element affect the fluctuating of the real estate's is meaningful.Basing on the review and the summary of the related literature, this article is closely relating to the element affect the real estate's price, some questions is spreaded in theoretical analysis and the empirical study. First we find that the fast growing of virtual economy is related to currency supply through Keynes's currency demand function. Then, the article analyses the three tools of monetary policy:bank credit, currency supply and interest rate and how the affect the price of real estate. Bank credit is the main capital source of the real estate companies. Sufficient bank credit is the main reason why the real estate market develops so fast in recent years. The increase of currency supply make the price of real estate rise. The rate of deposit and loan both have negative influence to the price of real estate. Then, the article constitute a money market equilibrium model base on the price of real estate. After resolving the model, finding out the basic currency supply has positive influence to the price of real estate. Use the data of 2005.7-2010.12 to construction two kind error correction model (ECM), one with the rate of deposit and one with the rate of loan. Proved the conclusion that the increase of currency supply will make the price of real estate rise. Bank credit is the most important element affect the price of real estate. Contrast with the rate of deposit, the price of real estate is more sensible with the rate of loan. In order to analyze the effect of real estate policy add dummy variable into the model. At last draw the conclusion and give advice base on the above analysis.