The Effect Of Interest Rate And Income On Housing Price: Theory And Empirical

With the housing reform and the process of urbanization become deepen and fast, the real estate of our country has already developed into the pillar industry of national economy, and playing an important role in social and economic development. As the fluctuation of housing prices can make a great effect on the national economy and financial system, our government has taken some macroeconomic measures to adjust and control.As an important means of monetary policy, since 2004, the price fluctuation of urban housing is very obvious which attracts much more attention. From 2002 to 2008, in order to resist the rising house prices and residential investment, the central bank has increased interest rate for nine times. However, in order to respond the economic recession which brought by the global financial crisis, the central bank has reduced lending rate for four times from September to December in 2008. Then dose the central bank could control the rising house price through rising interest rate? Dose it could stimulate the economy when the economy confront the external shocks? This is a practical problem which has to be studied.On the base of foreign and domestic research which related to real estate prices, in this paper, analyze and discuss the influence of interest rates and income to housing prices by combining the actual situation of housing market. The first part of the issue, introduce the main contents and defines the basic conception of this field and the methods of research, thus offers the theory foreshadowing and the analytical prerequisite for following research.The second part of this essay has introduced the constituent elements of housing prices and factors which affect the housing prices.In the third part, to begin with the theoretical background, analyzes influence of interest rates and income on housing prices. Through the theoretical analysis, we get the following conclusions.First, change the interest rates could affect the housing prices through adjusting both housing supply and need. Second, with the improvement of disposable income, the housing demand will increases, so, the housing prices will increase on the conditions of certain supply.In the fourth part, establish the VAR models about the interest rates, disposable income and housing prices to do empirical analysis. We can get the result that the three variables have a long-term Cointegration relationship.The last of this essay summarizes the conclusion of the above every part and propose the enlightenment to the questions of our country.