The Analysis Of Influence Of Interest Rate Adjustment On Housing Price

In 1998, China implemented housing reform in urban area. The real estate market has been booming since then. In recent years, the rapid development of real estate leads to soaring prices, which has become the most concerned and intensified conflicts among all economic and social conflicts. Since the second half of 2003, along with the continuing growth in housing price nationwide, the central bank employed interest rates control policy as an important macro-economic and industrial development tool. It is used more and more frequently, and the frequency and magnitude of adjustments in interest rates are becoming more flexible.This paper studies the case of Hangzhou to examine the impact of interest rate on housing price. Not only is interest rate one of the most important variables in the financial system, but also one of the most basic variable interest rate in the market economic system. The impact of interest rate on real estate market is mainly on housing price. Therefore, interest rate policy can be an important tool in regulating the real estate market.This paper first studies the transmission mechanism between interest rate and housing price based on theoretical analysis. Next, by way of empirical analysis including unit root test, cointegration test and granger causality test, it shows housing price is not so sensitive to the adjustments in interest rates. Finally, in order to further improve the interest rate mechanism to achieve better control results, this paper comes forward with following proposals:Firstly, to promote market-oriented interest rate reform. Secondly, interest rate policy needs to create synergy with other policies. Thirdly, the success of interest rate policy depends on the standardization and maturity of real estate market.