Research On The Relationship Between The Chinese Resident Leverage Rate And Commercial House Price

After the reform and opening up,China’s financial innovation speed has been greatly accelerated,and new financial products have been gradually accepted by the residents.After 1998,in order to meet with the housing monetization reform,China began to develop housing finance.First,China launched the housing mortgage loans in 50 large and medium-sized cities,and then gradually promoted them in other cities.Up to now,the house-purchasing loans have taken the largest proportion of residential loans,and the leverage ratio of residents have also risen steadily,which has caused some concerning financial risks.Taking the relationship between the leverage ratio of residents and the price of commercial house as the research theme,this paper clarifies the path and degree of their mutual influence.This paper could provide useful advice for the government to formulate effective financial risk management policies and housing market regulation policies,which plays an important role in the healthy development of China’s economy,the security of the financial system and the stability of the housing market.Based on the mutual impact between the leverage ratio of residents and the price of commercial house,this paper uses the simultaneous equation model to take research in accordance with the strategy of “theoretical research,realistic description and empirical test” and the method of “the combination of theory and evidence and comparative analysis”.Through theoretical analysis,this paper shows that the mutual interaction and impact between the leverage ratio of the residents and the house price has formed a “self-enhancing circulation effect”: the continuous rise of house prices has led to an increase in the expected benefit of the residents’ commercial house,which in turn leads to better expectations of residents and the promotion of their borrowing capacity as well as the improvement of the credit supply capacity in the financial system.And then the increase in the leverage ratio of residents has affected the demand of the real estate market.This whole cycle has intensified the fluctuation of the leverage ratio of the residents and the house price.From the statistics of China,the leverage ratio of residents and the price of commercial house both stand at a high level,and there are obvious regional differences.This paper uses the data of 35 large and medium-sized cities to conduct empirical tests,and obtains the following main conclusions: First,this paper compares about the results of empirical tests with different indicators and finds that the method of resident debt/resident disposable income is better than the method of resident debt/GDP in calculating the leverage ratio of residents.Second,the mutual interaction between the leverage ratio of residents and the price of commercial house exacerbates their fluctuation,and the degree of mutual influence is different in first-and second-tier cities.Third,different kinds of residents’ leverage rate management policies have different effects,and the same type of resident leverage rate management policy has different effects in different regions.Based on the above conclusions,in order to promote the healthy development of the financial system and the housing market,the key is to effectively control asset price bubbles and scale of leverage.The following measures can be taken: firstly,combine with the actual situation of our country to find out the starting point of reasonable control of financial risks;secondly,develop a long-term mechanism for the real estate market and lead financial institutions and residents to form rational expectations of house prices;finally,strengthen financial supervision,regulate the financing behavior of financial institutions based on short-term interests,and prohibit the illegal behavior of leveraged purchase of houses by personal credit loans such as consumer loans and down payment loans.