The Study On The Effect Mechanism Of Interest Rate And Real Estate Price

In this paper, we used the method of theoretical analysis and empirical analysis, based on the duality of real estate, studied the effect of the interest rate adjustment in China impact on real estate prices. Acrossing the analysis of People's Bank of China's actual adjustment of benchmark lending rate of types of financial institutions and the basic trend of the real estate prices since the " Housing Reform" in 1998, this paper revealed that in China's financial institutions, changes in benchmark lending rate first decreased and then showed up, interest rates tools from frequently used to the sparse use of policy adjustments to the law and the market prices of real estate nationwide trend of rising year by year. Through the theoretical analysis of interest rate policy may affect on the real estate market, we have revealed that as the governments'macro-control monetary policy,the adjustment of interest rates will have significantly impact on the demand and supply of real estate markets, so on the effect of principle of supply and demand, changes of prices in real estate market will happen. And we used the quarter data of real estate prices and related interest rates from 1998 to 2009 to conduct an empirical test, the results showed that, the adjustment of interest rate not only for developers, but also for consumers have had a great influence, which spread to the real estate prices, to make it consequential adjustment, in the short term, there is a positive correlation between price changes and interest rate, in the long term, interest rates showed a negative correlation between the long-term interest rates and prices. Continued tightening policies are conducive to inhibit the rapidly rising of property prices, which have been found the target of the Interest Rate Policy.However, Although interest rates policy can inhibit housing prices to some extent, the complexity of property price formation and the multi-agent nature of influencing factors, the imperfect nature of their interest rate instrument,and the monetary policy, including interest rate policy, applied in real estate market when the effect of regulation of prices, there are some time lag and other problems existed. Undeniably, in the current economic conditions and under the real estate market conditions, central bank uses the interest rate lever to control the housing prices, has still beyond the capacity of its department. Currently, housing prices rising rapidly, house slaves emerged day by day, in addition to the better use of interest rates and other monetary instruments, we also need a variety of national multi-sectoral measures to combined, commonly control the real estate prices which impact on the livelihood of the people.