The VAR Model To Analyze The Impact Of Interest Rates On Real Estate Prices

Interest rate policy is one of important macro-control manners, is widelyused in the process of the regulation of the real estate market. According torelative economic theory, higher interest rates is one of austerity measures tocurb housing prices, research on the formation mechanism of interest rate howinfluence the real estate price, for improving the effectiveness of interest ratepolicy, has urgently important theoretical and practical significance.Firstly, Paper summarizes the relationship between interest rate policy andthe real estate market, we make a deep and comprehensive analysis on thetheory of the transmission mechanism how changes in interest rates affect theprice of real estate market, and then can control prices. Secondly, I describethe status quo of China’s real estate market and problems in its development,this paper makes a brief descriptive analysis of the status of Shanghai real estatemarket, from three aspects, the demand, the supply and price in Shanghai realestate market. In addition, there is the empirical analysis about relevant datasuch as unit root test, cointegration test, Granger causality test, impulseresponse and variance decomposition.In this paper, we take empirical analysis of Shanghai for example, tostudy how the real interest rate affects the real estate prices, we adoptedmonthly data from January1998to December2013in the Shanghai’s real estatemarket, According to relevant research, we find that the impact to the real stateprice from interest rate was more obvious in1998-2003, In addition, the papercombinies the characteristics of interest rate policy, also views the financial crisis as a node, so the time is respectively divided into from1998to2003,from2003to2007, and from2008to2013, which can be studied in threestages. An empirical analysis of the results showed that Shanghai housingprices are not sensitive to changes in interest rates. Therefore, this paperconverting the ideas, not only consider from how to raise interest rates tocontrol real estate prices, but also think the interest rate and real estate prices astwo noninterference variables, and to improve them by theirselves, so that topromote our national economy. The effective interest rate can control the realestate prices, but the difference has not too direct statistical relationship, andthe adjustment is not significant,at different time intervals segment, the resultsof influence that effective interest rate affect real estate prices are not the same.This shows that the effects of interest rate policy in different time periods aredifferent, so the interest rate policy’s formulation and implementation should beunequal in different time. Additionly, the impact of interest rate changes on theShanghai real estate prices is different of the domestic conclusions, so theinterest rate policy’s development and implementation should be different indifferent places. Finally, considering the scientific construction of real estateprice control mechanism, to furtherly improve the interest rate mechanism sothat can achieve better effect, now proposing some recommendations as follow.First, a stable interest rate policy should be implemented. Second, improvemarket-oriented interest rate reform. Third, improve the real estate marketfurtherly, making it gradually standardized and maturely. Fourth, to improvethe statistical system, real estate and other economic information should becalculated and collected accurately and so on. These recommendations includeboth interest rate policy which will improve itself, and other recommendationson relevant policy. In short, the government should make efforts to improvethe regulation of interest rate policy on the real estate market.