The Regional Effects Of Monetary Policy Affecting Real Estate Prices

Since 1998,China adopted the reform of the housing system, stopped the distribution of physical house, implemented the commercialization and monetization of house gradually. In the market economy, a variety of factors affect the housing prices by affecting the supply and demand. As real estate is capital-intensive industries, supply and demand are very dependent on bank loans. Therefore, monetary policy has a significant impact on the real estate industry, housing prices become one of the main objectives of monetary policy control.From the perspective of monetary policy, this paper studies the regional differences of the monetary policy on housing prices. Firstly, this article theoretically analyzed Optimal Currency Area Theory, monetary policy's (money supply, credit and interest rate) effect on real estate prices, explained the economic mechanism of regional effects of monetary policy.Then, this article reviews the development of China's real estate market, summed up China's monetary policy on the real estate price regulation process. Then, this paper analyzes the overall and regional status of China's real estate market. Moreover,the relationship between monetary policy and regional housing prices was analyzed.Finally, this paper constructs a theoretical model that includes real estate price,monetary policy and economic fundamentals. Based on this model, a global vector autoregressive (GVAR) model is established, using quarterly data of 29 provinces and cities in China from 2004 to 2015, Examines the impact of money supply, credit and interest rates on the alienation of real estate prices in various provinces and cities in China.The empirical results show that: regardless of the depth or breadth, the monetary policy has a significant effect on the house price. But there are significant differences between the three monetary policies and these areas. In terms of differences of the policy instruments, real money supply ms was the best, followed by the actual credit 1,the real interest rate r is the worst. In terms of duration, the actual interest rate shocks lasted up to 40 periods. The actual money supply and the actual credit are shorter than the real interest rate, and the duration is between 8 and 13.In terms of Regional differences, the eastern part is responsive to monetary policy. 1 to 2 quarters faster than the middle and west, while the intensity of responding is maximum. monetary policy in the middle part is the most insensitive.quantitative tools, especially credit greatly impact on western prices, Interest rate's effect on the west is minimal.