A Study On The Relationship Between Real Estate Price And Credit Scale

Since the housing distribution reform in 1998, the Chinese real estate price has risen rapidly. Especially in recent years, this phenomenon caused universally concern. In order to control the rapid growth of the real estate price, the Chinese government made a series of actions; however, these actions did not achieve a decent result. Thus, the problem needs a proper solution indeed.Based on the analysis on both supply and demand of the Chinese real estate market, this paper finds that the rapid growth of real estate price is due to the huge demand which is stimulated by the expansionary credit scale. Then this paper introduces an evolution game model to show the process about how the expansionary credit scale stimulates the demand. This paper also makes study on the behavior of the developers and commercial banks and finds that the developers and the commercial banks has also made a positive impact on the real estate price, that is to say, there is a positive feedback process in the real estate market. Thus this paper draws the conclusion that it is the expansionary credit scale which stimulates the demand and the expectation of the rising price that causes the rapid growth of the real estate price. Then this paper uses the panel data of China's 28 provinces to make an empirical study on the relationship between the price and the credit scale, and the empirical outcome also proves the theoretical conclusion. This outcome also indicates that there are regional differences on the relationship between these two variables. Considering the outcome above, this paper points out that the governments should take short-term effects, long term effects and the regional differences all into account in the policy designing.