Impaction Of Income Imbalance On Commodity House Price

Since China’s housing market established the real estate market dominant position in1998, with the deepening of reform and opening up,China’s real estate market has maderemarkable development.There have been in short supply and prices climb higher andhigher at the same time. The gap between rich and poor in China also expanded. Toohigher prices not only affect the relationship between the providers and demand-ers, butalso has a strong social wealth transfer effect. The international experience also showsthat when the value of the assets of a country surges, the country’s income gap isexpanding. With house prices rising, the purchasing power of the real estate has becomean important measure of wealth and investment scale."Property" threshold "wealth" Rally,the income gap between ordinary workers and investors exacerbates the polarizationbetween the rich and the poor,which accelerates the wider socio-economic stratificationtrend. In theory, high prices lead to the widening wealth gap for the following reasons:First, when the housing prices soar low-income people even has its own residentialproperty, but it can not be traded due to their owner-occupied residential property so it canonly increase the carrying amount of the average family wealth. While those with a realestate investment or speculation ability, as long as the rise in property prices is greaterthan the interest they can get, they will attain more liquid wealth than the average theycan through the real estate investment or speculation, which will result in transferringwealth to the home buyers, especially the speculative buyers. For those medium-sizedcities where property prices are higher and on the rise, there will be the reverse flow ofthe tide "the rich into city, the poor into countryside". This will further exacerbate thewidening gap of income of urban residents.The current researches about the causes of the distribution of wealth effect focusingon real estate prices, while income inequality influencing the real estate is rare. This paper,using1996to2009china panel data and based on the panel VAR method to establish therelationship between income inequality and the commercial housing price,finds thatincome increased inequality will lead to the rise in the price of commercialhousing.Based on the panel regression model,we will conclude that there exists thesignificant U relationship between income inequality and real estate prices, exactly, whenincome inequality reaches to a point, income inequality to expand will significantlypromote the rise of commercial housing price.