The Fluctuation of Housing Price and Consumer Confidence: Chinese Evidence

摘要

Using the cointegration and Granger test, this paper studies the relationship between the fluctuation of housing price and consumer confidence in China over the years 2000–2007. The empirical results show that there exists a long run cointegration between the fluctuation of housing price and consumer confidence in China. Moreover, housing price generally Granger-cause consumer confidence, but not vice versa. The housing price–confidence relationship is driven by expectations about economy-wide conditions and the personal finances. This suggests that the confidence channel is based on the leading indicator property of housing prices, and it is a part of the traditional wealth effect.