The Study On China’s Real Estate Market Fluctuations And The Effects Of The Government’s Macro-economic Control

After2003, the real estate industry has developed into an importantlymultisectoral industry involving land, construction, trading and financial services.Meanwhile, the impact of fluctuations in real estate market on the national economyhas become increasingly significant. In order to prevent the effects of fluctuations inreal estate market on the macro-economy, the government has always been tough onthe real estate market regulation. This thesis uses the market base of China real estateinformation network including the real estate micro-data of35cities from January2007to December2012, measures the adjustment frequency, adjustment range andtendencies to rise and fall of real estate price in different types and areas and studiesthe characteristics of China’s real estate price stickiness. In addition, this thesisdecomposes the rate of change in real estate prices into the product of two terms: theproportion of the real estate whose prices change and the magnitude of price changesand studies the aggregated price setting model of China’s real estate market firstlyusing the method in Klenow and Krystov(2008), which provides microscopicevidences for academia to establish DSGE models in line with China’s real market.On the basis of the conclusion that China’s aggregated real estate market price settingmodel is state-dependent, this thesis develops a multisectoral DSGE model includingthe real estate market, uses Bayesian method to estimate model parameters andapplies second moment matching, Bayesian assessment, impulse response method andout-of-sample forecast to assess the effect of estimated model. Finally, based on theassessed DSGE model, this thesis uses the methods of forecast error variancedecomposition and historical decomposition to analyze the sources of the fluctuationsin house prices and takes advantage of the numerical simulation methods of staticcomparative analysis and impulse response analysis to delve the effects of real estate’scontrol policies, such as property tax and real estate mortgage loans.The results reveals that:(1) The frequency of price adjustments on China’s residentialreal estate is apparently higher than that on non-residential real estate. The house pricesadjustment frequency of first-tier cities is higher than those of the second-tier citiesand third-tier cities.(2) Price setting model test results show that: China’s aggregatedhouse prices is state-dependent and generally speaking, China’s real estate market hasreached the standards of market economy. Among them, the first and second class lots of ordinary commercial house price are strongly correlated with the state, office pricesare weakly correlated with the state, while the third class lots of ordinary commercialhouse, luxury housing and commercial housing are time-dependent.(3) The results offorecast error variance decomposition and historical decomposition show that: themain sources of fluctuations of China’s real estate production and house prices aretechnology shocks of real estate sector, real estate demand shocks and monetarypolicy shocks. However, in different historical periods and forecast periods, theimpact of each shocks on the real estate market is not identical.(4) The effects of realestate policy demonstrate that: raising the rate of property tax can effectively suppressthe rapid growth of real estate production and real estate prices, but it has a seriouseconomic influence; Reducing the amount of real estate mortgage can’t be effective todwindle the real estate production or to inhibit prices in the long run, but it candecrease non-performing loans of financial markets.