The Impact Of My Country's Real Estate Prices On Residents' Consumption

Since 1998,China canceled the collective welfare housing distribution policies,which was initially intended to facilitate the development of urbanization and real estate industry in a vigorous way to improve the level of general residents,income and consumption expenditure,ultimately stimulate domestic demand and macro-economic growth.As it turned out,in the past about 18 years,the marketization of the real estate industry has been rapidly developed and favored by social capital.The real estate price has been constantly rising,and the real estate has become the popular topic in general.As well known,the consumption expenditure of real estate is relatively large and accounts for a large proportion of the structure of residents' consumption expenditure,also accounts for a large proportion of household wealth.Real estate is characterized by dual attributes involved of both consumption and investment.When real estate deemed as consumer goods,the rapidly rising real estate prices will make those residents who do not own housing property but have absolute demand of it,have to increase savings,leading to reduction of other commodity consumption in order to accumulate the purchasing power of housing property,this paper defines this kind of phenomenon as the crowding-out effect of consumption due to rising prices of real estate;however,when real estate deemed as investment products,the increasing rise of Real estate prices,will increase nominal value of household wealth of residents who own housing properties,feeling more wealthy through sale and lease of real estate,resulting in the increase of consumption expenditure in general,this paper defines this kind of phenomenon as the wealth effect of real estate.Because the dual effect of rising real estate prices on consumption exists;therefore,in past lasting years,there were more and more domestic and foreign scholars interested in the study of the relationship between the real estate price and consumption expenditure.This paper is intended to disclose the effect of real estate price on residents'consumption expenditure through referring to foreign and domestic scholars' articles,description of revolution of traditional consumption functions and theories regarding the effect of real estate prices on consumption and its mechanism,meanwhile selecting partial municipal macro-data for empirical statistics,the study result is shown:the wealth effect of real estate leading to boost residents' consumption expenditure exist in partial areas of our country.The rising price of real estate is positively proportional to residents' consumption expenditure in general,for instance,Shanghai and Chongqing residents' consumption expenditure will respectively increase about 0.41 yuan and 0.44 yuan for every one yuan increase of real estate prices;however,not all areas of residents'consumption expenditure are applicable to this wealth effect of real estate,for instance,Tianjin residents' consumption expenditure will decrease about 0.61 yuan for every one yuan increase of real estate price;moreover,some areas of our countries,for instance,Wuhan don't have the wealth effect of real estate,or saying the crowing-out effect of real estate exists with Wuhan.Furthermore,the analytical results of empirical statistics show that the wealth effect of real estate could be graphed in an inverse-U shape because of the following three reasons:first,the quadratic coefficient of housing unit price in the consumption function of real estate wealth effect is negative;thus,the consumption function curve of real estate wealth effect should be an opening-down graph;second,the housing effect on consumption may be involved of a transitional threshold point,which could facilitate the housing price effect on consumption in terms of wealth effect or suppress it in terms of crowding-out effect;third,the wealth effect of real estate is not only related to housing price,but also relating to residents' disposal income.When the ratio of housing price to residents' income is comparably lower,the wealth effect of real estate(MPC of real estate)is larger,vice versa.