The Wealth Effect Of Housing On Consumption

Since the1980s, the impact of real estate wealth effect on consumption in themarket economies has become increasingly significant. Since the1998housingsystem market-oriented reform, the real estate industry of China has become apillar industry of national economy, an important source of economic growth anddomestic demand promotion. However in recent years, China presents theconsumer shortage which cannot meet the needs of the transformation ofeconomic growth. Housing prices continuing to be volatile, a sharp increase inreal estate investors and the consumption is obviously insufficient. In this context,whether the price volatility has an impact on consumption has drawn increasingattention of the relevant departments. Therefore, the influence of real estateprices on the Chinese consumer has a profound meaning. This paper firstdescribes the basic content of the real estate market and consumer behavior,characteristics and development. Secondly, based on the theory of theconsumption function and finance behavioral to study of the real estate wealtheffect impacts on the Chinese consumer. By summarized the theory andempirical research to analysis the transmission mechanisms and constraints ofwealth effect in China’s real estate markets. Again, using the stationary test,counteraction test, granger test and using the national time series to study theimpact of price fluctuations on household consumption. Finally, through analysisthe theoretical and empirical to draw some recommendations of appropriatepolicy.