A Comparative Analysis Between Housing Price Volatility And Economic Fundamentals And Its Related Government Polices

The purpose of this thesis is to test the correlation between house prices and economic fundamentals and governmental policies through an empirical analysis focusing on the area around Bohai Sea, Changjiang Delta District, pearl river delta and mid-west region in China, meanwhile we make a comparison between the discrepancies in determining factors of long-term and short-term real estate prices in different regions.The essay mainly divides into six parts, part one first gives a brief introduction of the research background, motives and methods applied. In part two, we delve into related research essays and materials mainly about influential factors of house prices both home and abroad and comparative researches on house prices in different regions. In part three, we make a qualitative description of the dissimilarity of the development in real estate markets in different regions, principally from the perspectives of prices and trading volumes for residential houses and also the local economic fundamentals.In part four, we provide related theories and theoretical models, in addition, we add a monetary policy variable on the basis of our original models, which forms our basic econometric models. In part five, we make use of cross-section data in four regions and the whole country, then individually, empirical analyses are made about the determining factors of residential house prices in both the short and long term. And the last part is conclusion, we discover in the long term, Changjiang Delta District and mid-west regions are severely influenced by economic fundamentals, while area around Bohai Sea and pearl river delta are sensitive to credit policies; in the short-term, Changjiang Delta District and mid-west regions are largely influenced by the local economic changes, area around Bohai Sea, Changjiang Delta District and pearl river delta are remarkably affected by exchange rate and anticipation factors. Real interest rate has a significant influence on residential house prices in four regions and the country as a whole, but with a relative small coefficient.