Developer Financing And Real Estate Prices,

Real estate industry is classified as a capital-intensive industry which needs a lot of capital as well as a long use cycle. It is necessary to analysis the relationship of the real estate enterprises` financing channels and housing price.Basis of the domestic and foreign literature, this paper introduces the relationship between real estate industry and finance, which stating from the real financing theory systematically, and then study the status of the real estate enterprises financial. We find that the financial structure of domestic enterprises is unitary by comparison with abroad. Although the data show that self-financing is the main mode of financing, the enterprises usually obtains bank loan through a lot of ways indirectly. So we argue that domestic enterprises rely on bank lending heavily.Additionally, according to the central bank branch in Chengdu, we analysis of real estate enterprises in Sichuan province as well as the status of the enterprises financial in Sichuan. We believe that from the beginning of 2006, the price of commercial housing and the investment are rising as fast as national wide. But from 2008, the investment dropped significantly, although the price reacts slowly, which consistent with the realistic market. Due to the supply rigidity in short term, the price appears to lag of investment. The ratio of oversea capital is small, but its development trend can not be ignored. From 2006, the pace of oversea capital speed into the Sichuan real estate market. In generally, most of the funding are powerful, which have little lending from the local financial institutions and are impact insignificantly on credit-control polices. So we should supervision to prevent the short-term arbitrage from hot money under the expected appreciation of the RMB. We qualitative analysis of the relationship between self-financing, domestic loan and commercial housing price by the data from Wind. The result showed that in the long run, domestic loans, self-financial and the price existent co-integration, which showed long run equilibrium among the three variables. From the analysis of cause and effect, there is a long term inborn cause- effect relationship between the self-financial and the housing price, combined with the error correction model(ECM)and impulse response analysis, we find the relationship is not very strong. The price of commercial housing is Granger cause of the loan, and not the contrary set up. The error correction model (ECM) and impulse response analysis shows that the price has a greater impact on domestic loan. According to the impulse response analysis, we also find that the relationship between the three groups in response to the impact of various variables are in the same direction, and this also explains the three co-integration relationship, and are stabilized after nine months. For example, housing price will be boosted stability nine months later by self-financial increase. It is important for government to establish policy.Finally, basis of the results of the analysis, some policy suggestions were proposed by the perspective of supervision and diversification of financing.