The Study On The Wealth Effect Issue Of Real Estate

Since the end of welfare housing in1998, our country’s real estate market developed rapidly, the real estate prices continued to rise, housing prices’ rise led to the family housing assets’ rapid appreciation, and now real estate has become the family’s most important asset. According to economic theories, the asset appreciation will generate wealth effect, with the growth in wealth, consumer expenditure will increase, which means that household wealth accumulates with the house estates’ appreciation and the consumer expenditure should also increase. But contrary to the theory, while the family housing assets expand, the proportion of household consumption expenditure in GDP does not significantly increase, on the contrary has the decrease trend year by year. Therefore, the wealth effect of real estate prices caused widespread concern in academia, but also attracted the attention of policy makers.In this context, the paper first combes the real estate wealth effect of domestic and international research literature with comparative analysis, specification analysis and empirical analysis, analyses the wealth effect of real estate prices from three angles pf Friedman’s permanent income theory, Modigliani’s life cycle theory and LC-of PIH model, and use the theoretical models to state interaction mechanisms of the wealth of real estate prices from five aspects of unrealized wealth effect, the cash wealth effect, the liquidity constraint effect, the budget constraint effect and substitution effect. After empirical examining of unit root test, panel co-inspection panel model selection and estimation, using panel data to establish the panel data model, in order to analyze the real estate wealth effect in the inter-regional and inter-city differences empirically. On the basis of analyzing house prices and stock wealth effect differences, an empirical analysis of relevant data for time series data of2002a quarter to the fourth quarter of2010, we can conclude that the wealth effect of housing prices in the long run relatively weak, and house prices had no significant impact on consumption in the short term; but for the stock market, whether for long-term or short-term analysis, the stock market does not exist a wealth effect. Theoretical and empirical research on the generalized wealth effect from the perspective of the relationship between housing prices and inflation. Finally, on the basis of summing up the full text of theoretical discussion and empirical findings, puts forward the policy implications on macro-control and make pointed references to enhance policy recommendations on the wealth effect of housing market.