An Empirical Study On The Interactive Relationship Between Real Estate Price And Income Gap In China

With the rapid and stable development of China’s economy, the real estate industry has played a more and more important role in our nation’s economy and has also gradually been the main industry in China. However, the phenomenon that we couldn’t ignore behind the rapid development of our country’s real estate is the monstrously high level of the housing price over the years. The fact that the average commercial showed a rising trend, a 10% annual growth rate, occurred in the past decade. But, at the same time, the income gap of residents have also been in a high level. So not only the rising real estate price has affected the income gap of residents, but also the income gap of residents also has a positive impact on the real estate prices.On the basis of theoretical analysis, this paper verifies the relationship between the real estate price and the income gap. Furthermore, based on the national and 25 provinces data, we attempt to analyze the interactive relationship between the housing price and income gap with further empirical research in two aspects.My paper will be divided into the following 5 parts. Introduction as the first part of my paper introducing the background, research objectives and research importance. Chapter Two will define the conception of real estate and the income gap, then using some related theories to discuss the factors influencing the housing price and income gap. Chapter Three illustrates the current situation of real estate industry and income gap of residents in China and then mainly analyzes the interactive relationship between the real estate price and income gap. Moreover, Chapter Four focuses on the empirical research followed by these steps: firstly, using OLS to respectively analyze the factors affecting the two variables: housing prices and income gap, secondly, building VAR model and Panel data model to focus on the interactive relationship between the real estate price and income gap of residents. We finally come to the conclusion that there is an interaction between these two variables.The last Chapter gives the conclusion of this paper and puts forward the policy proposal.