Research On The Affection Of Interest Rate Fluctuations On Housing Price

The interest rate has played a significant role on the Country's macro-control of real estate. Especially in recent years, the central bank has adjusted the deposit and lending rates many times so that they can control the real estate prices in a relatively reasonable range. However, the result is not so satisfactory. In this background, we will discuss the affection of interest rate fluctuations on housing price from the theory and empirical angles.The interest rate as a basic mean of the financial monetary policies is an important leverage to adjust national economy. Researching the affection of interest rate fluctuations on housing price is very important. It not only can help the government reinforce the policy function, enhance and improve the policy affection, make the macro-control policy more scientific, but also can help the adventurers forecast the dynamic trend of the real estate market ahead of time and keep them make the right choices. From the theory angle:the interest rate has an opposite affection on the housing price from the Gordon model. From the supply and demand angles:the housing price and the interest rate have a consistent trend by the supply side, but they have an opposite trend by the demand side. The interest rate can influence the both sides at the same time, so the final affection on the housing price is difficult to determine. We draw a conclusion from the empirical research:the interest indices (I), the housing price indices (LPH) and the land exchange price indices(LPL) are all the sequence of the first single, and they all have co-integration relationship respectively. Among them, one-year and three-year deposit rates(I1,I2),five-year loan rate(I6)have an opposite affection on the housing price; Five-year deposit rate (I3),one-year and three-year loan rates(I4, I5)have a consistent affection on the housing price. However, though the interest rates all have affection on the housing price in different degree, the affection is very weak from the ratios of the regression equation. On the whole, the housing price has a weak sensitivity to the interest rates. In the end, we analyze the deep reasons and put forward the suggestions:first, we should improve China's macro-economic environment, establish a unified and orderly financial market, set up an efficient and flexible regulatory system. Second, we can increase flexibility on the deposit rate and loan rate, deepen the reform of the money market interest rates and combined with the financial, tax and other policies. Third, we should adjust the supply and demand structure of real estate market, improve the land policy and strengthen the government regulation.This paper contains six chapters:Chapter one:introduction. As the beginning of the paper, we state the research background and significance, analyze the research situation both home and abroad, and then introduce the research methods and content.Chapter two:theoretical basis on the affection of interest rate fluctuations on housing price. In this part, we state the concept and theoretical basis of interest rate transmission and the housing price forming, and give the general economic explanations.Chapter three:empirical analysis on the affection of interest rate fluctuations on housing price. We choose the interest rates I, the housing price indices (LPH) and the land exchange price indices (LPL) from the third quarter of 1998 to the second quarter of 2011 as the sample data. Using EVIEWS 5.0 measuring software, we analyze the relationship between the interest rate and the housing price by ADF test,co-integration test and ECM model.Chapter four: the reason why the affection on the regulation of interest rates is weak. In the part, we analyze the reasons why the affection on regulation of interest rates is so weak:interest rate marketization is imperfections and the transmission mechanism is poor, the operating mechanism of the real estate market isn't favorable.Chapter five:the suggestions for stabilizing the housing price. For keeping the housing price stable and strengthening the affection of interest rate to control the housing price. We should promote the reform on the interest rate marketization, optimize the interest rate transmission mechanism and make the operating mechanism of the real estate market favorable.Chapter six:conclusion. In the conclusion, we state the viewpoint of the research and point out the creative work, shortcomings and some problems that are needed more study.