18th International Conference on Innovative Computing, Information and Control (ICICIC2024)
Onsite (Qinhuangdao, China) and Online, September 10-13, 2024

PS-22: ICICIC2024-WS05-22
Research on the Influence of China’s Real Estate Prices on the Degree of Inflation
Based on TVP-VAR Models
Qingmei Sun, Fanya Qu and Chunfang Zhong*
School of Economics and Management (School of Tourism), Dalian University, Dalian 116622, P. R. China*Corresponding author: 416073826@qq.com

Introduction
Changes in real estate prices have a significant impact on the economy. In recent years, with the acceleration ofChina’s urbanization process, the real estate market has been heating up, occupying an important part of the country’seconomy. Changes in real estate prices not only have a direct impact on the lives of residents, but also have a profound
impact on the capital market, financial markets and other global issues. Changes in China’s economic growth and inflationlevels can also have a huge impact on housing prices. When inflation rises, the real estate industry may experience apattern of bubble expansion in order to alleviate inflationary pressures and the need for asset preservation, thus further
exacerbating market risks. Therefore, an in-depth study of this issue can provide a better understanding of the mechanismof the impact of real estate market prices on inflation in China’s economic environment, and provide an importantreference basis for China’s macroeconomic policy making.
Influenced by the global economic environment and pandemics and other factors, China’s economic growth hasentered a new period, facing a series of new challenges and opportunities, in which the stable operation of the real estatemarket plays an important role in achieving economic growth and stability. Therefore, analyzing the mechanism of theinfluence of real estate prices on the degree of inflation plays a very important role in promoting the country’s
macroeconomic development and the healthy and stable development of the real estate market.

Research Questions

Methodologies

Although there have been some studies on therelationship between real estate prices and inflation, froman empirical point of view, the conclusions obtained fromthe studies are not consistent, and there are stillinsufficiencies in the modeling framework and analyticalmethods. The study of the impact of China’s real estate
prices on the degree of inflation based on the TVP-VAR
model can look at this issue from a new perspective andanswer this question more comprehensively andobjectively.

1) Theoretical analysis and empirical research2) Use Markov Monte Carlo simulation (MCMC) for
Bayesian estimation of the parameters and calculate
the impulse response shocks between the variables byBayesian modeling.

Mathematical Formulas
(1)
(2)
(3)
(4)

18th International Conference on Innovative Computing, Information and Control (ICICIC2024)
Onsite (Qinhuangdao, China) and Online, September 10-13, 2024

TablesTable 1. Variables and data sources
Variable Name

Abbreviation

Calculation Method

Data Sources

Consumer Price Index

CPI/National data

Real Estate Price Volatility
Scale

FSTRA

National data

Real Estate Price Volatility
Efficiency

Cumulative growth in real estate
investment/Cumulative growth in
fixed asset investment volume

FSTRB

National Housing Prosperity Index

Oriental Fortune Choice Data

Real Estate Price Volatility
Depth

FSTRC

Cumulative value of sales ofcommercial properties/Landtransaction price of real estateindustry

National dataConclusion1) Demand Management Policies for Speculative Home Purchases
Speculative home purchases are an important factor affecting the degree of real estate prices to inflation inChina. Demand management policies should be adopted to target speculative home purchases.
2) Supply Management Policies
It is found that there is significant time-variation in the impact of real estate prices on the degree of inflation inChina. Effective supply management policies are therefore one of the most important means of controlling
fluctuations in the real estate market.
3) Cost Management Policies
It is necessary to establish effective cost management policies to stabilize the development of the real estatemarket and maintain macroeconomic stability.
4) Financial Control Policies
It requires financial control policies to maintain the smooth operation of the macro-economy.