Empirical Analysis Of The Interaction Mechanism Of The Chinese Real Estate Market And The Stock Market

The real estate market and the stock market are two of the main parts of investment channels in China. Relationship between both markets contain substitutability and association, conduct research and stock prices, is conducive to make choice of the investment direction and know about investor psychology, which can help investors make judgments and choices.In recent years of China, the price booming spread from big cities to small and medium-sized cities, due to the high dependence of the real estate market on China’s financial system, real estate has become a key investment target for financial industry, real estate cyclical fluctuations determine the highly concentrated risk, with great potential impact on the national economy, price of real estate has affected the daily life of residents, become a national concern, and a correct understanding of the law of the volatility of real estate prices, an accurate assessment of the impact of the real estate market on the macro economy, helps to make a reasonable judgment of price fluctuations, in a variety of different voices to maintain an independent point of view. The stock market is a barometer of macroeconomic, price reactions to major news are rapid and violent, fluctuations in the stock market is regular. In the context of the risk management mechanism of the stock index futures become stable, the volatility of the stock index attract more attention, it is natural that the study of the relationship between the stock index and macroeconomic extended to the stock index and prices. The research of association between the research and the real estate market and the stock market can help to understand the overall situation of the national economy, observe potential adverse earlier, discover possible economic crisis. Because the economic cycle can be observed, focusing on the real estate market and the stock market can enhance the sensitivity of the economic crisis, can also deserve a lot of problems.On the basis of extensive research and learn from the research results at home and abroad, combined with China’s specific situation, I do in-depth analysis of the stock price index and housing prices, study of interaction mechanisms between price fluctuations and the stock index fluctuation in recent years, analysis of the wealth effect and investment effects of the stock market and real estate market, make analysis from the landlord-tenant and developers-buyers angle, and do empirical research on the relationship between housing prices and stock prices. To make the theory integrate practice better, I refine the real estate market and the stock market’s existing pricing model, summarize the combined factors that affect the stock market and real estate market, analysis of rational expectations and adaptive reflect expected prices, considered real estate prices from developers and buyers point of view as well as landlord and tenant, do a summary and analysis of the stock’s current pricing model, and preliminary conclusions.The empirical part of this article include a separate analysis of housing prices and stock prices, and VAR and GRANGER analysis as well as the cross-section and panel data analysis. CSI300Index shares four years, housing prices and stock prices causality analysis use four years of real estate sales price index, urban consumer price index, the total market value of the stock data, panel data selected real estate prices, real estate investment, the basis of the data of the area of real estate sales, real estate completion of the area, per capita GDP, tertiary industry GDP, stock market using the CSI300Index, stock turnover, stock market capitalization and stock turnover data, EVIEWS is mainly used as analysis tool.The paper concludes that:the real estate market and the stock market, the wealth effect between the real estate market and the stock market is obvious, non-rational expectations is a major reason of price fluctuations, the government’s macro-control of the real estate market and the stock market should be more cautious, consider relevance of both markets, also the tremendous impact of change of the real estate market on the national economy as a whole, listen to a wide range of views and take the possible consequences into account in the policy-making process,The linkage effects of the real estate market and the stock market not only inherits the results of previous studies, but also has a certain novelty, of course, there are some shortcomings. The indicators used in this study introduced the exchange rate in price indicators, handoff ratio in stock price indicators, integrated from multiple perspectives to build models of housing prices and stock prices, and strive to achieve more comprehensive results. Numerous indicators covered in house prices and the stock price index system, due to the author’s limited theoretical level data and gathering capability, these quarterly and monthly data can not be collected, only annual data do. Some of the findings in this article need further discussion and validation.