Hot Money Inflows Empirical Study Residential Real Estate Prices Impact

Recently, with the steady appreciation of RMB and the growing gap of interest rate, large number of Hot Money flow into China, especially the Real Estate market. But Hot Money is just like a double-edged sword, which can promote the development of civil economy, meanwhile, can lead to the rising of asset price, in the end, resulting in the large of bubbles. Once the profit of Real Estate is disappearing, or the economic situation of China is not in favor of Hot Money to seek profit, the Hot Money will outflow the market. What we are faced is the asset-price burst, maybe bring about the economy crisis. Thus, how to make use of Hot Money to promote the development of Real Estate, and prevent Hot Money the large number of pass in and out, which needs our reasonable measurement of the scale of Hot Money, and properly realize how the Hot Money influences the price of Real Estate.This article primarily researches how the Hot Money influences the Residential Building price, and detail discusses the measurement of Hot Money flow into China. And it sets up a mode of VAR of Hot Money and the related economic indexes of Residential Buildings-including its sub-categories, for empirical research. When measure the scale of Hot Money inflow, it sets up a mode of VAR of Hot Money and the related economic indexes of Residential Buildings-including its sub-categories, for empirical research. When measure the scale of Hot Money, the article focuses on the part of Hot Monet hiding in FDI. It builds nine index of FDI, sets up a prediction mode of FDI, and makes the gap of actual value and predicted value as the Hot Money hiding in FDI. By empirical test, it can draw the conclusion:(1) It shows positive correlation between Hot Money and the Residential Building price;(2) It exists equilibrium relationship in long term, but the Hot Money is not the primary cause of the price of Residential Buildings.(3) It finds out the change of Hot Money cannot cause the change of Residential Building price for the low-income House holding.(4) The response of Residential Building to Hot Money is positive and negative alternate, and there isn’t lasting effect. But the response of High Quality Residential Building to Hot Money is the most obvious and lasting.(5) There is about28.26%of High Quality Residential Building variance due to Hot Money, but only1.84%of low-income House holding.In the end, according to the result of empirical test, the article puts forward policy suggestions and some future research prospects. For example, to set up many departments cooperation mechanism, and monitor the Hot Money Flow. To rationally guide the Hot Money Flow and so on.