Effects Of Money Supply To China's Real Estate Prices

In recent years, the money supply increases rapidly. The amount of China’s broadmoney supply (M2) amounted to103.61trillion yuan at the end of March2013,breaking the100trillion mark. The ratio of M2and GDP is200%.The monetization ofthe economy is serious. Although the huge increase in the quantity of money, thecountry’s price level is not high.CPI has been at low levels. Throughout the ten yearsof housing price, the house prices has been rised since2003. In this paper, along withthe rapid growth of the money supply, but the price level is at low levels, housingprice are surging, Studying the effect of money supply on house prices.Thefeasibility of providing advice to our real estate regulation has significant theoreticaland practical significance.The purpose of this paper is affected by theoretical analysis and empiricalresearch study of money supply on real estate prices, draw broad money supply,quasi-money, gdp, income’s influence on the direction、the impact and effect ofhousing price. Based on the conclusions of theoretical analysis and empirical researchpropose appropriate policy recommendations,providing the corresponding policyrecommendations for the healthy development of the real estate market.This paper first generalizes the research achievement of both at home and abroad.Secondly, China’s money supply are analyzed, focusing on the degree of monetizationof the economy, changes in currency structure and running track of M0, M1, M2, andanalyzed the reasons for the rapid increase in the money supply, recalling the historyof real estate development and problems and so on. Then, analyzing the relationshipbetween money supply and house prices from three angles: the demand for money, themoney supply, bank credit. Elaborated monetary theory, including the moneycurrency structure, the multiplier effect of money and so on. Analysis of the impact ofthe implementation of the functions of the quasi-monetary assets on asset prices.Fourth, on the basis of the status quo and theory, selecting broad money supply M2,quasi-money, income, gross domestic product and other indicators, by establishing empirical measurement model demonstrates the relationship between money supplyand house prices. Finally, on the basis of theoretical analysis and empirical research, Iraise short-term recommendations to control prices from the perspective of monetarypolicy and to establish long-term mechanism for regulation of real estate throughcooperation with other policies.By studying the relationship between prices and the amount of money, theconclusion is that the increase in money supply will cause house prices to rise.Thereis a long-term stable equilibrium relationship between money supply and house prices;To a certain extent,the increase of GDP and income pushes prices higher. But moneysupply is the main factor of rising house prices.