Studies On China's Abnormally High Real Estate Price Based On Endogenous Money Supply

Since 1998, in pace with the reform of economic system, the real estate industry becomes the pillar industry in China. As well as the boom of real estate marke, the real estate price goes up fast. Internal and external lessons and experiences show that, with no doubt, the steep rise in the real estate price relys on finance expansion. Especially in the rising stage of the economic cycle, the ascending of real estate price readily leads to the market irrational booming. As a result, the real estate price will ascend continuously under the collaborative effect of real estate and finance.The close relationship between real estate industry and finance industry determines the collaborative effect of money and real estate price. On one hand, by the indirect financing, the supply and demand factors of real estate, which affect the real estate price, can obtain relevant money supply support. On the other hand, in the credit economics, as the high quality security, the fluctuation of real estate price will change its value which affects money supply. So between real estate price and money supply, there is a symbiosis mechanism.According to the present situation of foreign especially our financial system, bank is still the principal part. Bank is the foundation in the process of money supply. Because most funds used in real estate industry are mainly from band credit, so this paper focuses on the relationship between bank credit and real estate price instead of the one between money supply and real estate price. Refering to the typical financial depression issues happened in many countries and districts, bank credit always played a necessary role in the process of risk accumulation. Especially in the rising economic cycle, the market usually lead to irrational booming through the symbiosis mechanism, which push real estate price to a abnormal high level. In the background of our country's abnormal real estate price situation, This paper prove the symbiosis mechanism between the real estate price and the bank credit leads to the abnormal highness of real estate price from the view of endogenous money supply system. Also this paper proposes the active advices and measures that maintain the stable stir of real estate market and finance market.