Research On The Interaction Between Real Estate Market And Stock Market In China

Since the reform and opening up, the China’s real estate market and the stock market are gradually formed and growing rapidly. After ten years of rapid development, the total market capitalization of the China’s stock market has leapt to second in the world. And the real estate market has also become the lifeblood of the national economy. The real estate and stock markets have become the main risk accumulated markets. Stocks and real estate are two major types of investment objects for investors. Therefore, studying the interaction and grasping the dominant one between real estate and stock markets have great significance to economic growth and investors’ rational investment.This paper analyzed the transmission mechanism of the interaction between the real estate market and stock market. The real estate and stock markets showed a certain positive interaction through credit expansion effect and the wealth effect. And to some extent, the conduction effects of macroeconomic promoted the interaction degree of the real estate and stock markets. In the portfolio effect, there was a kind of negative interaction between the real estate and stock market. However, the final result of the interaction between both also needed to be analyzed according to the actual situation. This paper selected two representative countries, the United States and Japan to analyze the interaction between real estate and stock markets by the empirical analysis, so that we can provide a useful reference for the development of China’s real estate market and stock market.This paper analyzed the interaction between China’s real estate and stock market through Co-integration test, Granger causality test, VAR model and impulse response functions. According to the empirical results, there was not long-term co-integration relationship between the China’s real estate and stock markets, but there was a stage causal relationship. In1998-2005, the China’s real estate market and stock market were negative correlative, and the real estate market was in a dominant position. In2006-2008, the China’s real estate and stock market showed a positive correlation, and the stock market was in a dominant position. In2009-2011, the China’s real estate and stock markets influenced each other, and showed a positive correlation.The interaction between the China’s real estate market and the stock market has its own characteristics. Macro-economic and Macro-economic policies have an important impact on the development of the real estate market and the stock market, and the real estate has become an important growth point to boost GDP; the role of stock market as a barometer of the national economy becomes significant. At present, the China’s real estate market and stock market contact more and more closer. They influence each other and present positive interaction. Therefore, national macro-control should integrate and coordinate the two markets; the Government should expand investment and financing channels; personal investors should invest rationally.