The Study On The Geographical Difference Of The Regulation Of Monetary Policy On Real Estate Prices

To control the rapid rise of real estate prices has become an important government regulation in macroeconomics. The fundamental reason is that the real estate price in China is now gradually deviated from the basic economic, which exacerbated since2003, and has brought enormous harm to the long-term development of the macroeconomic.The reform of China’s real estate industry began in1997, when the Asian financial crisis erupted. Then, our government promised not to devalue the RMB on the one hand, while on the other hand had to deal with the economic weakness brought by the strong currency. As a close sector to the other industries of the social economy, the real estate industry had been selected by the government to stimulate economic development. Therefore, China abolished the welfare housing distribution system since1998, and began to adopt the market principle, since then, real estate prices entered the stage of rapid increase. Facts has proved that the real estate industry does contribute significantly to the prosperity of our nation’s economic development, but resulting severe social and economic problems as well. National disposable income level lags far behind the rate of increase in real estate prices. The soaring real estate prices brings about higher prices, lower consumption level and difficulties in the dynamic changes in national economic, increasing financial risk, and social unrest and so on, which has become a huge threat on the long-term development of China’s economy. While the real estate prices keep rising, the State Council continuously promulgated policies to regulate and control them, but with little effect and an even more higher prices. Although the rise level is different among major, medium and small cities, the overall prices are rising.Why is the government’s control policy failed and even harmful? The primary cause is as a pillar industry of the economic development of China, the government should control the soaring real estate prices on the one hand, but the control measures should not be too severe on the other hand. The government is solicitous about that oversize control may damage the development of other related industries, in particular, the basic industries as steel, cement, and the national economic lifeline the financial sector. From this point of view, the government has fallen into a dilemma in regulating the real estate prices. Thus, the key lies in formulating a reasonable policy to stabilize the real estate prices without compromising the expense of other industries. The government control policies are fiscal policy, land policy and monetary policy. Since2004, our government, has taken the monetary policy as the primary means of control the real estate prices, with the deposit reserve ratio and the deposit and lending rate as two main control indicators, which point to the money supply volume. Many scholars has done a lot of research on the regulating effective of monetary policy, and the basic conclusion is:the regulating of monetary policy on the real estate prices is effective.However, for geographical imbalance of economic development and other reasons, this nationwide monetary policy on price control resulting various effects, with obvious effects in some areas, and not obvious in other areas, which makes research in monetary policy provides a foundation for study the geographical differences of the real estate prices control. This thesis take it as a starting point to study the geographical difference of the regulation of monetary policy on real estate prices, and try to find out the reason for such differences so as to offer reasonable policy proposals for the regulating of real estate prices.