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| AN INQUIRY INTO THE REAL ESTATE INVESTMENT IN CHINA BASED ON THE TIME-VARYING PARAMETER MODEL |
| ZHANG Jin-mei1, SHEN Yue2, LU Wen-bing3 |
1. School of Business, Xi'an International Study University, Xi'an 710061, China;
2. School of Economics and Finance, Xi'an Jiaotong University, Xi'an 710061, China;
3. Xi'an International Trust Limited Company, Xi'an 710061, China |
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Abstract This paper examines the real estate investment in China based on the time-varying parameter medel. The authors suggest that China should focus on the study of investment proportion between Chinese and overseas investors. At the same time, investment demand for housing and consumer demand for housing should be distinguished to optimize regional investment environment for real estate under current economic structure and to carry out different macro control policies accordingly. Coastal areas in southeast China boast better investment environment for real estate with high economic development level and dense urban population. In contrast, China's interior provinces take no advantage in terms of investment environment for real estate as they are underdeveloped in both economy and urbanization. However, among these provinces, those subsidized and supported by national policy can proclaim huge potential for real estate development, corresponding to the development progress of China's economy. The research find that (1) REI gives a significant boost to GDP growth as elasticity of REI remains at 0.531 to 0.546 constantly; (2) GDP, domestic bank loans as one of the real estate development funds sources and interest rate have different effects on REI. Output elasticity of REI is 1.38 to 1.35 and the positive effect of which appears in the third quarter of the year and continues in the almost one year thereafter; loan elasticity of REI is 0.15 to 0.31 and the positive effect of which appears in the first quarter of the year and keeps rising thereafter but remains positive within two years; interest rate elasticity of REI is -0.56 to -1.17 and the negative effect of which begins with a time lag of two quarters and reaches the peak in the sixth quarter.
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Received: 16 December 2009
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2010, Vol. 25 
