Research On Wealth Effect And Urban Difference Of China’s Real Estate Market

Since the housing reform in 1998,China’s real estate market has developed rapidly.On the one hand,real estate has become the pillar of national economy;On the other hand,with the development of the real estate market,the continuous rise of housing prices has become a hot issue of common concern.At the same time,people’s real estate wealth has also increased significantly,while China’s consumption rate has continued to decline.Whether China’s real estate market has a wealth effect,the rise of housing prices can promote consumer spending;or it has crowding effect on consumer expenditure domestic scholars don’t coincide in opinion.Based on the model of life-cycle permanent income and the panel data of 35 large and medium-sized cities from 2002 to 2016,this paper conducts an empirical analysis on the existence and characteristics of wealth effect in China’s real estate market.Four empirical hypotheses are proposed:first,wealth effect exists in China’s real estate market;Second,the wealth effect of China’s real estate market is heterogeneous,that is,the real estate market in different cities has different effects on the consumer spending.Third,the wealth effect of China’s real estate market changes over time.Fourth,there is a threshold effect in China’s real estate market.Through the empirical analysis of the data of 35 cities,the first empirical hypothesis is verified.In order to test the second empirical hypothesis,this paper divided 35 cities into first-tier cities,new first-tier cities,second-tier cities and third-tier cities for empirical research according to their economic development level.The study found that there was no wealth effect in first-tier cities,and the increase in housing price would only crowd out consumer spending,while second-tier cities had a significant wealth effect,and the housing price changes in new first-tier cities and third-tier cities had no significant impact on consumption,which confirmed the second empirical hypothesis.In order to verify the third empirical hypothesis,this paper also divides the whole period into two periods,and conducts empirical research and longitudinal comparison.It is found that the crowding out effect of the real estate market on consumer spending in first-tier cities is greater in the second phase than in the first phase.For second-tier cities,there was a significant wealth effect in the first phase of the real estate market,but in the second phase,the impact of housing price on consumer spending became insignificant and the coefficient became negative,which confirmed the third empirical hypothesis.In order to verify the fourth empirical hypothesis,this paper selected housing price as a threshold variable for regression,and found that there was a significant threshold effect on the impact of housing price on consumption,which confirmed that there was a threshold effect on the wealth effect of the real estate market.According to the empirical results,this paper also gives corresponding policy recommendations.