Financial Support For The Mechanism Of Domestic Price

In recent years, China's real estate has developed rapidly, urban housing prices have soared, housing price of Xi'an also displays a rapid upward trend. But rising housing price and financial support are inseparable. The development and purchase of housing inevitably needed financial participation. Under the condition of domestic economy reality, the housing developers face a serious shortage of funds, while residents can not afford such high housing price, so financial support has become a crucial factor in the development of the housing market. In order to promote the harmonious development of financial market and residential market, financial support mechanism in housing price has been studied in this paper.Based on the review of the development of Xi'an housing market, and the mutual relationship between housing industry and the financial industry, the housing price equilibrium model in its own funds, financial support and asymmetric information has been discussed in this paper. By studying the differences in such three conditions, the conclusion that financial support promotes the rise of housing price has been drew. That is to say that housing price rises with the increase of financial support. This conclusion is also proved by the quarter data of Xi'an from 2003 to 2009. Analysis results shows that the relationship between financial support and housing price is positive and significant related, and in the long term equilibrium relationship is stable. Housing price will rise 0.23%, when financial support increases 1%. Meanwhile Granger causality test shows that financial support is the crucial reason of housing price movements.Finally, in order to promote a greater harmonious development of financial market and residential market, some policy recommendations are proposed, which include adjusting bank credit orientation, optimizing the supply of domestic market structure, strengthening the supervision on bank lending, building an effective constraint mechanism of the credit risk, expanding direct financing channels of real estate, regulating investment behavior, inhibiting speculation, and so on.