Empirical study on the relationship between sale price and rent of house in China

With the quarterly data of housing price indices and rent indices in China from first quarter in 1999 to fourth quarter in 2009,the relationship between housing price and rent was tried to be figured out in Chinese real estate market based on the seanonal adjustment,cointegration test,Granger causality test,impulse response analysis and variance decomposition analysis.The results show that there is no long-term interaction mechanism between housing price and rent;housing price variation does not influence on rent variation,but rent variation has limited effects on housing price variation in short run.It is considered that housing price variation in China is mostly attributed to investment and speculation demand rather than owner-occupied demand,as viewed from the demand side of the housing transaction.Rent rising may lead more people turn to house purchasing and result in housing price rising,but its impact is small since these people are not the leading part in housing trading market.