Analysis Of Effect Of Monetary Policy Based On The Real Estate Market

Since China’s implementation of housing reform from1998, rigid demandpent-up for many years directly erupted, leading to soaring the real estate marketprices. To the beginning of the21st century, To the beginning of the21st century,China’s real estate market, whether it is a new house or second-hand housing, bothshowed the volume and price rising at same time. Land finance has become theimportant factor to promote the development of local economy, at the same time，which also pushed up the scale and performance of banks and other financial industryassets correspondingly risen. The prosperity of the real estate market exceeded thegeneral population affordability, which directly affected their consumption ability.The relevant state authorities found the problem, and since2003，Which timelylaunched a series of Macro-control measures from fiscal and monetary aspects，aimedat curbing the excessive expansion of the real estate market. Under the effect offactors such as the excessive money supply, RMB appreciation and real estate pricesrising expectation, China’s real estate prices still remain high, which reduced theeffect of tightening monetary policy. Effective monetary policy transmissionmechanism is the basis to ensure the success of the monetary policy implementation，Which is the excessive money supply, or irrational expectation on earth to lead to thecurrent real estate prices remaining high, now examine the relationship betweenChina’s real estate price changes and the monetary policy transmission mechanism，whether in theory or in practice, all has the remarkable significance.In the structural arrangements, this paper firstly introduces an overview ofresearch at home and abroad, and has carried on the review, and then describes thecurrent development of China’s real estate market and its existing problems. Based onanalyzing the phenomenon, this paper analyze the relationship between monetarypolicy and real estate price, and the influence of real estate to the entity economyfrom the theoretical level. In the empirical analysis part, the paper uses VAR o test theeffect of monetary policy on real estate prices and real estate price fluctuations on thereal economy. This study show that: the adjustment of monetary policy can affect realestate prices, from the effect of short-term regulation, the money supply means betterthan the interest rate instruments in a variety of monetary policy variables, andbecause the interest rate policy has significant time-lag, the direction both interest rate price changes and real estate price changes show consistency in policies early.As can be seen from the analysis results, China’s monetary policy affect realestate prices, and then passed to the real economy. Overall, to some extent themonetary policy can play a regulatory role on the price of real estate, but the effect isnot ideal. To this end, from the real estate market participants angle, this paper furtheranalyze the hindering factors which may possibly exists in real estate price regulatorymechanism, and put forward corresponding countermeasures and suggestions forpolicy makers and participants, and strive to maintain the sustained and healthydevelopment of China’s real estate market.