The Effectiveness Of Chinese Monetary Policy Regulation Real Estate Price

Real estate is the important pillar of economic development; it also concernspeople’s daily life. With the unreasonable rise in property prices, the housingproblems of urban residents gradually appeared. Especially in recent years, along withthe deepening of China’s urbanization, the rigid demand of housing is becominghigher. Accompanied by the reform and opening-up,“That group of domestic peoplewho become wealthy first” get hold of the abundant accumulated wealth. As the stockmarket is imperfect, and it lacks high-tech added value and high profit industry toinvest in, and we also lack reasonable guide investment channels, so the real estateindustry with high economic returns has become the focus of speculation.At the same time, the bank credit system of our country is imperfect; the highcapital industry “kidnapped” the banks, coupled with the expected substantial profitsand the private capital gain, the funds for project development is， abundant. Underthe background of high demand, the housing prices are further promoted in order toobtain the excess profit; they are beyond the rational price. In the face of its ownfiscal revenue and the administrative achievement, and the inaction of centralregulation of housing policy, the local government, as a “rational man”, promotes theincreasing high prices of house.In this paper, it discussed from the transmission mechanism of monetary policyregulation on real estate price, theoretically elaborated that when the monetary policyon real estate prices are low, it pulls the economic growth and improves the theorybasis of real estate prices. From the reasons of high real estate prices, it alsoelaborated the general theory about the weakening effect on the regulation of realestate price caused by the private capital and land system of monetary policy. Itestablished the Allen&Gale and CC&LM model to reflect the monetary policytransmission mechanism and the41stperiod data of VAR model of the first quarterfrom2002to2012.The results shows that monetary policy can affect housing price throughinvestment and consumption in the long term, but in the short term, the money supplyand interest rates are not effective in regulating the real estate price, the regulation ofmonetary policy effect is weakened. In view of the above conclusions, this paperpresented some suggestions, such as establishing long-term monetary policyregulation real estate price policy; strengthening the reasonable guide of private capital, accelerating the process of marketization and political reform and so on.