China's Four Municipalities In The Residential Market Price-volume Relationship Of Empirical Research

In the real estate market, the housing market has been playing a key role and attracting a considerable amount of attention from people. However, academic literature related to trading volume in the housing market research is rather rare. Although the price and trading volume are decided simultaneously in the economic theory, given the consumption-investment dual characteristic of housing market, the academic research should not be limited to price but be studied together with trading volume so as to describe the market conditions completely.Therefore, this paper is trying to answer the following questions. Does the relation between price and trading volume exist? If so, whether there is an actual cause and how does it works?The reason why we choose four special municipalities'(Beijing, Shanghai, Tianjin and Chongqing) housing market as the research object is that the four special municipalities are developing rapidly in recent years, which arouse the development of economy in areas surrounding them. Actually, the four special municipalities have formed the Bohai economic circle, the Yangtze River Delta economic circle and Yuxi economical lounge. In view of the above, it is very realistic and significant to study the housing markets of four special municipalities.Based on VAR Model, Granger Causality Test, Impulse Response Function and Variance Decomposition, using the data from Wind Info, we empirically studied the price-volume correlation of housing market in four special municipalities. Several conclusions are as follows.First of all, there is granger causality between price and trading volume in the housing markets of Beijing, Shanghai and Tianjin, which can explains the lead-lag relation between price and trading volume. Especially in Shanghai housing market, price granger causes trading volume, vice versa; which indicates that there exist overinvestment (speculation) demand in Shanghai housing market, and thus causes"chase rise"phenomenon.Secondly, the results of Correlation coefficient Analysis indicate a statistically significant positive price-volume correlation in Shanghai, Tianjin and Chongqing respectively, which can be mainly explained by co-movements of prices and volume caused by exogenous shocks, instead of the Granger causality between prices and volume.Finally, through the Analysis of Variance Decomposition, I find that the"contribution"of price to trading volume is 46.43% and 22.54% respectively in Chongqing and Shanghai while the corresponding proportion of Tianjin and Beijing is 6.32% and 0.59% respectively. Therefore, I believe that the trading volume largely can be explained by price mainly results from overinvestment (speculation) demand, which means the overinvestment (speculation) phenomenon is most serious in Chongqing housing markets.