The Wealth Effect Of China Real Estate Under Urbanization

With the development of China’s urbanization and real estate market and the declineof urban residents consumption rate year by year，the impact of fluctuations in housingprices on consumption has becoming a hot topic in the academic field.Domestic research on real estate wealth effect is always based on one variable,i.e.the sales price in different forms of property, however，the commercial real estate，industrial real estate， and other non-residential property forms really exert less impacton people’s income and consumption. Besides, the research make a comparison andanalysis usually from residents’ income level or geographical distribution, never from theinfluence of urbanization. Therefore, my thesis selects the residential sales price，disposable income and consumer spending as the research variables, apply the theory ofconsumption function and transmission path for real estate wealth effect theory， usepanel data model, and make a microscopic analysis of the differences in housing wealtheffect according to different urbanization rate in provinces and cities. The thesis mainlyincludes four parts.The first part is to tease out and sum up the existing theories of consumptionfunction and the conduction path of real estate market wealth effect, calculate thehousing price growth rate in our country, the housing price to income ratio and rate ofurbanization， thus provide a data support for the empirical analysis below.The second part is to adopt the2000-2011panel data of31provinces，set up effectvariable coefficient model， and test various provinces and cities housing wealth effect.The empirical analysis shows that housing price fluctuation is inhibiting the residents’ consumption expenditure from most provinces and cities, and the housing wealth effectof different provinces and cities is different.In the third part，according to the different provinces and cities urbanization level，I divide our31provinces and cities into five groups, then group the panel data and buildthe model to estimate and analyze the housing wealth effect law of five groups. We cansee from the empirical analysis that: provinces with lower urbanization level, theirhousing wealth effect is positive and vice versa.The fourth one, in the light of the transmission path of the housing wealth effect， isputting forward suggestions on four aspects:1. reducing the renters’ budget constrainteffect;2. lowering the property owners’ liquidity constraints;3. bringing down theCrowding Out Effect (Substitution Effect) of price fluctuations in real estate;4.promoting the harmonious development of the urbanization and the real estate market.