The Influence Of The Wealth Effect Of The Real Estate On Household Consumption

Real estate assets and equity assets are the most important assets of households, before the Internet bubble burst in 2000, the study of wealth effect has been limited to stock market, after the Internet bubble, as stock prices continue to decline, consumer spending of the residents did not fall instead, the wealth effects of real estate caused widespread concern in academia. From the real estate market-oriented reforms in 1998, real estate prices continue to rise, as real estate assets is the most important asset in most of the family, when house prices were rising, households want to improve the quality of life through price increases, while the government wants to rise in house prices can expand domestic demand, and promote economic. This paper intends to investigate the real estate wealth effect on household consumption from the microscopic point of impact mechanism.This paper systematically veriews the relevant literature wealth effect of real estate, and it is divided into two parts that is the macro perspective and micro perspective to analyze. Be summarized on this basis, and point out that the real estate wealth effect of microscopic conduction mechanism simultaneously. Meanwhile, in the theoretical analysis part comb development stage theory of the consumption function with empirical inductive method, and find a suitable form of the consumption function at this stage, that the Life Cycle-Permanent Income Hypothesis(LC-PIH). Based on this theory to build the model, using the large family of micro database to test the existence of the real estate wealth effect and its difference on housing types,age,income,etc. come to the conclusion of this article as the following.First of all, the wealth effect of real estate is significant, that is the real estate wealth of households have a significant role in promoting consumption. The consumption elasticity coefficient is 0.18. In this paper said that said the real estate wealth of the residents increases 1%, durable goods consumption will grow by 0.18%. The elasticity coefficient in OECD country is 0.12 ~ 0.17, that is the wealth effect of the real estate in our country is also worthy of attention in contrast.Secondly, the real estate wealth effect is not much difference between renters and owners of family housing, which is related to the imperfect rental market. Real estate wealth effects under different economic regions show significant, that is economic developed areas, the greater the wealth effect. Economically underdeveloped regions, the wealth effect of the effect is smaller. Meanwhile, the head of the household age, household income also affect the real estate wealth effect, the smaller the head of household age, the greater real estate wealth effect, the higher the household income, make greater real estate wealth effect.