Study Of The Effectiveness Of The Real Estate Policy

As the key industry with great influence on people's life, real estate industry has been extensively concerned ever since its 1998 structural reform. In order to balance the market and to stabilize the real estate price, government have manipulated the industry through land control, interest rate adjustment, tax, credit constraint and indemnificatory housing plan etc.. However, considering local governments'material interest mixed, strict policy may become soft during the enforcement. If then the market do not trust the government policy any more, will their negative expectation damage the policy effectiveness, even cause the opposite outcome? And what is the mechanism and characteristics between government reputation and real estate price? According to the Reputation Theory, the policy reliability impact on public expectation and market reaction, so as to influence the efficiency and effectiveness of government policy. This paper applies the Reputation Theory to the specific industry, namely the real estate industry.Beginning by coordinate the foreign and domestic research on Reputation Theory as well as real estate industry, this paper illustrates the theoretic logic through the reputation mechanism model, the case study and the quantity analysis. The main conclusions go as follows:There are notable relationship within the growth rate of real estate price and the previous quarter's land price, the previous quarter's money supply, the house income and the preferential loan rate which is dummy variable of government reputation. Government reputation could quickly impact the public expectation as well as policy effectiveness. The negative relationship demonstrates that the current expectation was strongly influenced by the previous policy effectiveness, so the previous failure will result in the current failure. A tiny deviation from promised policy will deteriorate the government reputation. Therefore, the government should strengthen its reputation through reliable, clear and predictable policy, the centralized enforcement system, the authority in financial supervision, the mid-and-long term industry planning and the public involvement.