Empirical Research On Regional Differences Of The Wealth Effect In China's Real Estate

The real estate market have rapid development after the housing system reform in 1998 in China. the investment in real estate development 3623 billion yuan in 2009, relative to 361 billion yuan in 1998, up nine times. The rapid development of real estate in China contribute to get rid of the Asian financial crisis and reach the rapid economic development.In the United States, Britain, macro economic changes usually associated with real estate prices greatly. The real estate market prosperity promoted consumption of economies of many developed countries, this kind of consumer spending increases caused by asset prices are called"wealth effect". Along with the global housing boom, wealth effect now becomes more and more attention of scholars. As for nearly a decade, China's real estate prices is climbing, whether China's real estate prices continue to rise is also prompted consumer spending increases? This sparked a domestic scholars of great interest.China's real estate market is an emerging market, but the real estate market in China have a rapid development, Real estate to local economic contributions have appeared, so by local governments of all. however, whether the rising prices are benefit or only burden? Does it have caused the people increased income, stimulating consumption, which Is real estate wealth effect? Our price hikes in the past ten years, there are 2/3 of the provinces prices more than doubled to high prices, people with high prices closely linked to people's livelihood, central to often be out of real estate punch, many people doubt state control of the real estate macro-control real estate wealth effect is hindering the play? These are the problem this paper faces.Wealth effect theory study earlier In foreign, but also the theory is in developing, the paper analyzes the wealth effect from Keynes theory of consumption theory to the life cycle hypothesis and permanent income hypothesis, also analyzed the development of the theory of modern wealth effect and t the transmission mechanism theory of wealth effect. Wealth effect is through the cash wealth effect, not cash wealth effect, budget constraint effect, liquidity constraints effect, substitution effect on consumer confidence influence of consumption.. The six conduction mechanism, can divide again to direct and indirect wealth effect wealth effect. The empirical study use the same method.Based on empirical research found that 31 provinces, cities and autonomous regions, residents'consumption changes is sensitive to changes in income and real estate wealth except Tibet. hainan, xinjiang, gansu, hebei, zhejiang province has direct these five provinces, the rest of the wealth effect of the wealth effect haven't appeared. With the wealth effect in five provinces, the most obvious in wealth effect is xinjiang, the smallest is zhejiang. In income effect, urban consumer spending in Shanghai, chongqing, henan, jiangsu, sichuan, gansu, qinghai, guangxi, hebei, Beijing, guangdong, heilongjiang, Shanxi, hubei, yunnan, jilin are very sensitive to on urban salary income,not to the real estate increasing wealth.In indirect wealth effect, real estate boom index synthetic can rise in consumer confidence that the real estate market boom is the important reason increased consumer confidence. Therefore, a healthy development of the real estate market can promote consumption, conduce to the long-term economic growth.Then, this paper analyzed the reasons that the empirical results, mainly because of follows:first,it is rapid growth of house parts, regional economic differences. Second, the residents'consumption of income was too sensitive situation hasn't changed. Third, the poor liquidity, real estate wealth facing strong credit constraints. Fourth, unreasonable structure of the real estate market. Fifth, the local government has deprived of the land value increment of earnings, urban residents enjoy real estate appreciation income less. Sixth, the excessive speculation. Etc. these factors caused the most comprehensive real estate wealth effect to play. Also analyzed the five regional real estate wealth effect obvious reason, xinjiang and gansu prices slower, hainan particular geographical position, zhejiang place fry building, hebei benefit from Beijing. Overall, the current regional real estate wealth effect is not effectively. Real estate on economic growth has an important role in promoting China's real estate market, but has been out of the rational development of interval, it will be in worse situation only adjust by the market. In the market failure, requires the government to adjust, nowadays, our country's real estate market also need to adjust the wealth effect of the real estate market. In the market failure, requires the government to adjust, nowadays, our country's real estate market also need to adjust the wealth effect of the real estate market.Finally, the paper puts relevant policy Suggestions based on the analysis of the reason.