Research On The Relationship Between Credit Quota And Real Estate Price In China

As the pillar of the national economy, real estate connects investment and consumption. It is crucial for the development of the national economy, the growth of consumption and the improvement of people’s standard of living. Since2006, the housing price in China remains high. It even shows an upward tendency after the adoption of a new policy in2005, reversing the overall trend of the market. With the rise of the housing price, the proportion of added real estate loan, which is the primary source of real estate investment, gradually increases in total added loan. As is known to all, real estate industry is a highly risky. Once the excessively high price, caused by overheating investment, exceeds the consumers’ bearing capacity, the bubble will burst, leading to severe financial meltdown and a series of social and economic problems. Accordingly, the research on the present financial support for real estimate provides an important basis for estimating the possibility of financial crisis in the real estate market.In existing researches, the credit quota is considered as the primary factor contributing to the rise of housing price. But what is the mechanism for this? Does the credit quota boost housing prices, or the rising price stimulates credit quota, or there is a certain kind of interaction between them? With the help of the time series data from2006to2014, this thesis applies the VAR model and impulse response to analyze the mechanism for the interaction between financial support and housing price. The result shows that the higher housing price significantly promotes the credit quota, but the increase of credit quota does not obviously facilitate the rise of housing price. Finally, the thesis puts forward several constructive suggestions on the credit structure and credit channel of real estate market.