Abstract:

Based on the supply and demand model, this paper qualitatively analyzes the impact of interest rates, purchase restrictions and their linkages on housing prices and finds out that the results are unclear. Using the annual panel data of 69 large and medium-sized cities from 2007 to 2014, the empirical research shows that at the national level, the change of interest rates is negatively correlated with house prices, while the purchase restriction policies increase house prices but it become effective by raising interest rates. After further classification of cities according to economic development and urbanization level, it is found that the impact of policies on the real estate market is significantly heterogeneous. Therefore, the real estate control policy should consider the mixed effect of interest rates and purchase restriction policies. The whole country can adopt the interest rates to control the house prices directly, while the purchase restriction policies need to be accompanied by other measures. In the case of a single city, double-high cities are more likely to adopt purchase restriction policies to restrain housing prices, while other cities can use interest rates and purchase restriction policies to jointly control housing prices.

Key words: interest rate, purchase restriction policy, house price, market regulation, regional differences