Macroeconomic Factors and Housing Market Cycle: An empirical analysis using national and city level data in China

摘要

This paper analyzes the relationship between macroeconomic factors and the housing market cycle in China through theoretical and empirical analysis. The housing market cycle and the regional differences are investigated both on the national level and using data from four typical cities from China. It is found that house prices are determined by the current and lagged macroeconomic variables such as GDP. Significant regional differences in house prices are also identified. In the long run，there is a stable equilibrium relationship between macroeconomic factors and house prices. The elasticity of GDP，income and investment to house prices are greater than one. In the short run，the error correction mechanism can correct the deviation of house prices from the long run equilibrium level through a slow and gradual process. Among the four typical cities，Beijing and Shanghai have greater fluctuations in their house prices than Guangzhou and Chongqing.