Research Of The Crowding-out Effect Of Real Estate Investment

In recent years, as the rapid economic growth, increasing of people’s income and acceleration in China, China’s real estate industry has been developing fast and the real estate industry has become one of the most important industries in China. However, real estate development is not only playing a positive economic role in promoting growth, but also causes negative impact on the economic development when it developed to a certain extent. The crowding-out effect of real estate investment is one of the major negative impacts for economic development. However, there is a few studies about the crowding-out effect of real estate investment, therefore this paper will analyze the crowding-out effect of real estate investment in detail. The nature of the crowding-out effect of real estate investment is the negative externality to economic development, which caused by the overdevelopment of the real estate industry.This paper introduces the major features of China’s real estate investment. Then, based on the analyze of the generation mechanism and the mechanism of action of The crowding-out effect of real estate investment, this paper gives the qualitative analysis on whether The crowding-out effect of real estate investment does exists in China in both region perspective and industry perspective,which mainly uses the data of the real estate and macroeconomic development. Then, this paper analyzes the relationship between real estate investment and economic development, which includes the relationship between real estate investment and economic growth and the relationship between real estate volatility and factor price volatility.According to the panel data analyze conclusion, the writer finds that the real estate investment dose have crowding-out effect to other investments while the level of the crowding-out effect is different in different regions. The cointegrating test and Granger causality test result shows the real estate investment and other industry investments have a long-term stability cointegration relationship, and real estate investment causes either crowding-in or crowding-out effect to different investments. the research of the relationship between real estate and economic growth which adding The crowding-out effect of real estate investment shows the positive impact that the real estate investment dose to the economic is almost neutralized by the crowding-out effect. This paper also uses the VAR model and finds that the volatility of real estate investment has little influence on the change of factor price.Finally, this paper gets four basic conclusions:First, The nature of the crowding-out effect of real estate investment is the negative externality to economic development, which caused by the overdevelopment of the real estate industry. Second, The crowding-out effect of real estate investment dose exist in China. Third, The crowding-out effect of real estate investment has more influence to large cities in China. Fourth, the level of the crowding-out effect is still controllable.