The Bank Credit And The Housing Price Fluctuations

In comparison,Chinese economy is facing the problem-the dual surplus of capital and goods at present,which is different from the problem-the dual shortage of capital and goods in the past.Therefore,how to resolve the overcapacity has become a heated issue.The real estate's destocking is put on the agenda.In 2015,Chinese government implements moderately loose housing credit policies,which include the minimum down payment of housing provident fund loans to first suite 20% and that to the second suite 30% if the first suite mortgage has been fully paid up.Those policies are used to relieve the pressure triggered by downward economic development and promote Chinese real estate market's healthy,sustainable,stable and well-organized development.Under this background,this paper studies the impact of bank credit on the housing price fluctuations based on the panel date analysis of the First-tier and Second-tier Cities,which has both academic value and practical value.In this article,bank credit and housing price are selected as the research objects to discuss their impacts on first-tier and second-tier cities' bank credit and the housing price fluctuations.Firstly,the conduction effect between bank credit and housing price is analyzed based on the theory and modeling.Secondly,the Chinese average selling price of house is chose as an explained variable to measure housing price and the financial institutions Renminbi load is chose as explanatory variable to represent bank credit in the analysis of practical examples.Finally,GDP,CPI and LI are chose as explanatory variables during the analysis process.However,these three explanatory variables are not significant so that they are removed from the model.In the paper,the constant coefficient modeling is established by using housing price and bank's credit annual panel date of the first-tier and second-tier cities without taking inflation factor into consideration,which data are collected from 1999 to 2013.And this model is tested by Granger-causality testing method.In conclusion,the relationship between bank credit and real estate price is unidirectional causality.The housing price of first-tier cities paly the leading role concerning bank credit in one-way causality.And that for second-tier cities shows the opposite law.The bank credit of second-tier cities has a far greater impact on the housing price fluctuation,when compared with that for first-tier cities.Because of this,relevant government authorities should take different credit policies to the different cities for better control of the real estate price.On one hand,the government of fist-tier cities should combine the credit policies and other macroeconomic policies.Consequently,they should determine the number of goal about the new housing for local area reasonably according to the level of economic growth.At the same time,they should also manage the housing land supply strictly and guide the housing needs of consumers effectively.On the other hand,the government of second-tier cities should pay attention to the implementation of more reasonable and effective credit policies and coordinate corresponding financial policies to control real estate price fluctuation within rational range.