The Relevance Between The Volatility Of Houses Asset Price And The Economic Growth

Since the implementation of the new housing policy in1998. China’s urban housing real estate market keeps growing and plays an important role in promoting consuming level and economic growth in China. However, under the background of which the current real estate industry is deformed including high prices and strong volatility, facing with a "hard landing " in macro economy, in order to stimulate domestic demand and maintain economic stability for sustainable growth, it’s necessary to have a good look on the relevance between the volatility of real estate price and economic growth.Firstly, the paper summarized the studies, in the view of the domestic and foreign scholars, on the price of real estate and economic growth theory. The foreign scholars have made a lot of research about the factors, especially the macroeconomic fundamental factors, that influences real estate price. At the same time, they hold the idea that the real estate price will impact macro economy through the influence of residents’consumption and investment. The domestic scholars have conducted a lot of research on the specific characteristics of Chinese real estate market. The paper made a summary of the domestic and foreign study, and found that the research on the fluctuation relations of the real estate price and economic growth is very few, and the in-depth analysis is even less. Therefore, the article focus on the time series of the fluctuation relations of the real estate price and economic growth, and make a in-depth analysis of the regional volatility difference.Secondly, the paper made a theoretical analysis on the relationship between the price of real estate and the economic growth. The price fluctuations effect the economic growth through Tobin q effect, wealth effect, the effect of the balance sheet and the expected effect. Conversely, economic growth will come with income rise, urbanization and industrialization, and have an impact of price fluctuation. Through the above analysis, the real estate price fluctuations are mainly effected by demand and supply respects factor, the paper introduced a demand and supply model to explain the fluctuation of housing price.Thirdly, the paper chooses the BEKK model to describe the fluctuation relations between the real estate price and economic growth by comparing of a wide variety of volatility models. We selected the monthly data from Jun.2005to Dec.2011of70cities, and build the BEKK model to estimate the volatility spillover effect. To analysis the regional volatility difference, the paper established two explaining models, and found the influence factors of volatility spillover effect by stepwise regression.Finally, according to the conclusions of this study, the paper proposed some recommendations on policy:Regulation of the real estate market has the necessity, and a single macro policy cannot achieve a success on both control price of the real asset and stable economic growth. the decision makers should undertake policy allocation.