The Property Market and the Macroeconomy of the Mainland: A Cross Region Study

HKIMR Working Paper No. 5/2007

29 Pages Posted: 19 Jul 2007

See all articles by Wensheng Peng

Wensheng Peng

Hong Kong Monetary Authority - Hong Kong Institute for Monetary Research (HKIMR)

Dickson Tam

Hong Kong Monetary Authority - Hong Kong Institute for Monetary Research (HKIMR)

Matthew S. Yiu

Hong Kong Monetary Authority - Hong Kong Institute for Monetary Research (HKIMR)

Multiple version iconThere are 2 versions of this paper

Date Written: March 2007

Abstract

This paper studies the nexus between the property market and the macroeconomy of Mainland China in 1998-2004, using panel data models covering 31 provinces and major cities. The estimates suggest three main conclusions. First, there seemed to be a two-way linkage between property price and GDP growth. In particular, property price increase had a significant positive impact on investment, but no evidence of a wealth effect on consumption is obtained. Second, bank credit expansion did not seem to play an 'accelerating' role in property price inflation, although the latter is found to have contributed to bank credit increase in recent years. Third, property price growth may have deviated from fundamentals in coastal areas, as evidenced by a negative relationship between housing and rental prices.

Keywords: Property Market, Macroeconomy, China

JEL Classification: C33, E22, R1

Suggested Citation

Peng, Wensheng and Tam, Dickson and Yiu, Matthew S., The Property Market and the Macroeconomy of the Mainland: A Cross Region Study (March 2007). HKIMR Working Paper No. 5/2007, Available at SSRN: https://ssrn.com/abstract=1001638 or http://dx.doi.org/10.2139/ssrn.1001638

Wensheng Peng

Hong Kong Monetary Authority - Hong Kong Institute for Monetary Research (HKIMR) ( email )

3 Garden Road, 8th Floor
Hong Kong
China

Dickson Tam

Hong Kong Monetary Authority - Hong Kong Institute for Monetary Research (HKIMR) ( email )

3 Garden Road, 8th Floor
Hong Kong
China

Matthew S. Yiu (Contact Author)

Hong Kong Monetary Authority - Hong Kong Institute for Monetary Research (HKIMR) ( email )

55/F Two IFC
8 Finance Street, Central
Hong Kong, HK
China
+852 2878 1974 (Phone)
+852 2878 7006 (Fax)

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