The Role Of Quantitative Easing in Stabilising the Chinese Real Estate Market
DOI:
https://doi.org/10.61954/2616-7107/2025.9.4-10Keywords:
Monetary Policy, Real Estate Market, Stepwise Regression, Investment, Quantitative Easing.Abstract
Introduction. Amid declining external demand, reduced domestic consumption, and issues with excess production capacity, authorities in several countries, including China, were forced to resort to quantitative easing to support the national economies. Additionally, the potential implications of the current US tariff policy further complicate this matter. Considering the real estate sector’s paramount importance to China’s economy, it is essential to understand how monetary policy adjustments, particularly quantitative easing, will impact the market.
Aim and tasks. The study aims to analyse the effects of contemporary monetary policy in China on its real estate sector and, consequently, to understand the possible implications for the Chinese economy resulting from this type of monetary policy. This study also explores how market dynamics, property values, and overall investment trends are affected by changes in monetary policy, interest rates, and lending practices.
Results. The analysis reveals that the most significant influences on the average housing price dynamics in China from 2007 to 2023 are the average per capita disposable income of urban residents and the volume of investment in national real estate development projects. These factors explain 98.9% of the variation in housing prices (R² = 0.989), respectively. Moreover, changes in lending rates have little impact on housing prices. Simultaneously, an increase in household income by one unit is accompanied by an increase in housing prices of 0.151 units (p<0.01) and an increase in real estate investments of 0.010 units (p<0.05). The Durbin–Watson test (DW=1.367) did not reveal autocorrelation. Simultaneously, interest rates, money supply (M2), and the value added by the secondary sector had no statistically significant effect.
Conclusions. The analysis revealed a correlation between increased income levels, rising real estate purchases, and increasing housing prices. Real estate investments directly influence supply capacity and overall market dynamics, and fluctuations in these investments lead to housing price adjustments. Substantial capital inflows into real estate development intensify competition among developers, thereby driving up the prices of land and housing. As changes in interest rate expectations have only a limited impact on the market, the central bank’s ability to control housing prices through monetary policy is constrained. Ultimately, income levels are more important than construction costs.
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