Analysis for Real Estate Investment of China : Based on the Warning System of Monitoring Macro Economy Prosperity

• Main Authors: Shu, Jingying, Song, Jiawei
• Format: Others
• Language: English
• Published: KTH, Bygg- och fastighetsekonomi 2011
• Subjects: real estate investment; leading indicator; granger causality; VAR models
• Online Access: http://urn.kb.se/resolve?urn=urn:nbn:se:kth:diva-77008

Real estate industry plays a significant role in high speed of economic development in China. However, with increasingly high housing price and scare land resources, real estate development is caught in a vicious circle. A large number of families could not afford their housing while housing prices have no trend to decrease which leads to huger gap between the rich and the poor and causes indirectly instability of society. Therefore, creating a healthy and stable real estate investment market is extremely urgent. The purpose of the thesis is to research the relationship between leading index of macro economy prosperity and real estate investment based on the reality. We found that leading indicator Granger causes real estate investment while real estate investment Granger causes leading indicator at the same time. Based on that, this paper also forecasts the real estate investment with VAR models in the following 7 years which was proved to a circle of real estate market. In the light of our research, some target suggestions are pointed out at last.