The Rising House Price And The Residents’ Consumption

Since the commercial housing reform in China in 1998,our government promulgated on a series of decrees and stopped the housing material distribution,at the same time,it established housing commercialization and socialization to form a new housing system.With the reform of housing system and the rapid growth of housing price,the real estate market has appeared a scene of prosperity.At the same time,the rapid development of the national economy also led to the real estate industry matures,the real estate industry has gradually became one of the pillar industries of the national economy,the status of the real estate wealth in residents wealth are also rising.However,the prosperity of the real estate market has not led to the improvement of the residents’ consumption,GDP proportion of national consumption has decreased from 47.09%in 2000 to 38.19%in 2014.In the economic background of continued volatility and obviously insufficient in national consumption,the relationship between housing prices and residents’ consumption has attained more and more attention of domestic and foreign scholars.The changes in residents’ consumption that asset price fluctuations caused has already become a focus of international economics,with the booming development of the real estate market,housing price fluctuations will inevitably produce certain effect on national consumption.Different from other investments,the real estate has special duality,it has both investment properties and durable consumption duality.As investments,investors can achieve the value for investment returns through the investment in real estate.As durable goods,the residents can buy property to satisfy the demand for housing consumption.When housing prices rise,the investors will get investment income,they can cash earnings or get more loans through mortgaged property to increase the current consumption.For renters,rising prices will lead to rising rents,purchase cost will increase at the same time,so the residents will reduce consumption for more savings.However,real estate investors renters and potential house buyers always exist at the same time,so the impact of the housing price rising on residents’ consumption will not have a single direction.So what is the impact on residents’ consumption,promoting effect or inhibition,this is the focus of this paper.In recent years,many domestic and foreign scholars have completed many in-depth studies about how housing price affect residents’ consumption,but they do not achieve an unified conclusion.They divide the conclusion into three categories through theoretical analysis and empirical analysis.The first is that housing price rising can promote national consumption,the second is that housing price rising has no significant effect on residents’ consumption,the third is that housing price rising can inhibit residents’ consumption.This paper will expand research from two aspects:firstly,starting from the classical theory of consumption,theoretically analyze the impact of housing price rising on residents’consumption,secondly,verify the impact of housing price rising on residents’consumption from the aspects of empirical analysis by selecting the data and build the model.The article mainly includes six parts.The first part is the introduction of the article which introduces the research background,research significance,research methods,the possible innovation and deficiency.The second part summarizes the study of the related literature at home and abroad.The third part mainly introduces the theoretical foundation.The fourth part mainly analyze the price fluctuation and the relevance of residents’ consumption.The fifth part is the empirical analysis of this article.The sixth part is conclusion an policy recommendations.Considering the different impact on different income level residents’consumption,this article will divide income into five parts:low income,medium low income,middle income,medium high income,high income.In addition,considering the structure of the population will affect the consumption,this article will also take the rate of the unemployed into the control variable for empirical.