Analysis of Factors Influencing Real Estate Prices in China based on the use of GRA and VAR

다국어 초록 (Multilingual Abstract)

The high real estate price in China is an issue subject to heated debates. This issue not only concerns the well being of the Chinese people in general, but also relates closely to the Chinese national economic development. The current real
estate prices in first and second-tier cities in China are excessively high, which do not match the local residents’ income level. They reduce their happiness and sense of belonging to the city. As a result, people living in such cities prefer to spend their money buying real estates in third or fourth-tier cities instead, causing a sharp increase in the price of these cities as well. Faced with this dilemma, the state government has introduced a series of regulatory policies amid the restraint of these price hikes in all cities and the stabilization of the real estate market, only to find unsatisfactory effect. As such, we find it necessary to explore the root cause underlying the continuously rising real estate prices, search for influencing factors that are truly valid, and provide a more realistic and theoretical basis on which the state government can introduce more effective regulatory policies in the regard in the future.
Based on the research already done by the domestic and international scholars regarding the influencing factors of the real estate price, this paper selects data pertaining to the real estate market in China drawn in 2002 through 2019. Upon considering the validity of such data, we use them to analyze the developmental status of the real estate market in China. Then, we select certain influencing factors to perform qualitative and quantitative analysis. These factors include the price’s self-factors, economic factors, financial factors, and residents’ living standard factors. Finally, we give a forecast to the future real estate prices in China.
In terms of the methods we use for producing the results of our research, first of all, we adopt the Gray correlation analysis to quantitatively explore the relative importance of these factors to the real estate price.
Our research discovers that factors of money supply M2, balance of deposits made into various financial institutions, investment completed in real estate development, medium and long-term loan interest rates, and GDP all have a relatively high degree of Gray correlation with the real estate price. Secondly, we select highly correlated influential factors using which to construct the vector autoregressive model VAR, and subsequently study the dynamic impacts that these factors have on the real estate price. Our respective study shows that money supply has a short-term impact on the real estate price. It impacts the price positively at first, and negatively later on. The positive and negative impacts alter cyclically. As for the balance of deposits made into financial institutions, it has a high positive effect on the current price, but a negative effect on the overall price in the long run.
When it comes to the investment completed in real estate development, it has a positive influence on the overall real estate price. The current real estate price does not respond quickly to a change in medium and long-term loan interest rates, but is impacted positively by it later on. GDP positively impacts the real estate price during its first three stages, after which this impact declines slightly. Over time, this declining trend weakens gradually, and approaches stability at last. As for the factor of GDP, it impacts the real estate price positively in general.

참고문헌 (Reference)

1 Liu Junling, "Economic Analysis of real estate Bubble", 1 ( 06 ) :198-202 ., 2008

2 Lv Fengli, "Research on real estate price regulation policy", 28 ( 07 ) :41-44, 2017

3 Gu Cuiling , Zhao Shuai , Peng Ge, "Analysis of Factors Influencing China 's Real Estate Price", 148 149 ., 2015

4 Song Shiyu, "Analysis on macro-control policies of Real estate in China", 12 ) : 61-62, 2016

5 Brady R.R, "Measuring the diffusion of housing prices across space and over time", 26 ( 2 ) : 213-231, 2015

6 Liu Caiyun , Yao Jian, "Real estate price Prediction Model based on multi-factor influence J", 17 ) : 33-38, 2017

7 Nie Guilin , Ding Guzheng, "Necessity and Feasibility Analysis of developing Real Estate Trust Fund in China J ]", 10 ) : 34-35, 2006

8 Fu Yunling, "An empirical study on macroeconomic Factors affecting China 's real estate price Fluctuations", 14 ) : 22-28, 2017

9 Fang Lin, "Research on the Relationship between Tight Monetary Policy and Real Estate Price Fluctuation J", 01 ) :10-12, 2008

10 Zhang Tao , Wang Xuebin , Chen Lei, "Heterogeneity belief and real estate price in public facility evaluation -- China ， Possible explanations for the formation of housing bubbles", 11 ( 1 ) : 33-55 ., 2008