IDEAS home Printed from https://ideas.repec.org/p/hkg/wpaper/0512.html
   My bibliography  Save this paper

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

Author

Listed:
  • Wensheng Peng

    (Research Department, Hong Kong Monetary Authority)

  • Matthew Yiu

    (Research Department, Hong Kong Monetary Authority)

  • Dickson Tam

    (Research Department, Hong Kong Monetary Authority)

Abstract

This paper studies the nexus between the property market and the macroeconomy of Mainland China in 1998-2004. Panel data models are employed, using statistics for 31 provinces and major cities. Empirical analysis suggests a two-way linkage between GDP and property price growth. In particular, changes in property prices affect GDP growth mainly through the investment channel. Property price inflation in recent years is found to have had a significant and positive effect on growth in fixed asset investment, particularly real estate investment. By contrast, no evidence of a wealth effect on consumption spending is found. This is possibly because a large number of households have not benefited from house price appreciation. Moreover, households have limited means to withdraw housing equity to finance current consumption. 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. Property price growth may have deviated from fundamentals in coastal areas, as evidenced by a negative relationship between housing and rental prices.

Suggested Citation

  • Wensheng Peng & Matthew Yiu & Dickson Tam, 2005. "The Property Market and the Macroeconomy of the Mainland: A Cross Region Study," Working Papers 0512, Hong Kong Monetary Authority.
    • Handle: RePEc:hkg:wpaper:0512
    as

    Download full text from publisher

    File URL: http://www.info.gov.hk/hkma/eng/research/RM12-2005.pdf
    Download Restriction: no
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Deng, Yongheng & Girardin, Eric & Joyeux, Roselyne, 2018. "Fundamentals and the volatility of real estate prices in China: A sequential modelling strategy," China Economic Review, Elsevier, vol. 48(C), pages 205-222.
    2. Yongheng Deng & Eric Girardin & Roselyne Joyeux, 2015. "Fundamentals and the Volatility of Real Estate Prices in China: A Sequential Modelling Strategy," Working Papers 222015, Hong Kong Institute for Monetary Research.
    3. Charles Ka Yui Leung & Wei Wang, 2007. "An Examination of the Chinese Housing Market through the Lens of the DiPasquale- Wheaton Model: a Graphical Attempt," International Real Estate Review, Global Social Science Institute, vol. 10(2), pages 131-165.
    4. Mr. Steven A Barnett & Mr. R. Brooks, 2006. "What’s Driving Investment in China?," IMF Working Papers 2006/265, International Monetary Fund.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hkg:wpaper:0512. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Simon Chan (email available below). General contact details of provider: https://edirc.repec.org/data/magovhk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.