Analysis Of Real Estate Price Under Different Expectation

This essay analyzes the factors that influence the price of real estate withthe theory of demanding and supplying,which investigates not onlyfundamental analysis,monetary policy,international capital flows,andspeculative investment,but also the influence on price of real estate exerted byexpectation in various forms.On the basis of this, a further conclusion isdrawn through the empirical test on the panel price data of twenty biggestcities in China: for price of real estate, adaptive expectations are more close tothe real price than the rational expectations, and among all contributingfactors, expectation is the most critical one.However, personal income and foreign direct investment account lillte forthe price.In addition,monetary policy is still effective, and expansionarymonetary policy has significantly negative effect on the current price, but itwill increase next-period price noticeably. On the contrary, interest ratepolicy has little effect on the current price, but negative impact on thenext-period. Nevertheless, the counteraction from inflation on the interest ratepolicy should be paid attention to. On the other hand,three suggestions aremade about the price control: bubbles have been accumulated in the marketwithin the golden past ten years, and if government wants to prick thesebubbles, the key is to combat housing speculation, the hoarding of theproperty developers as well as the total liquidity of the whole market; Besides,expectation is the primary factor affecting the price,therefore, governmentshould regulate people’s expectation towards real estate price,whose key stepis to manage the directions and to strengthen the reliability ofexpectation-related policy.Finally, government should focus more on the pricelevel the same time with addressing price problem,and the key policy is to cutthe money supply.