Effects of Short-Term International Capital Flows on China’s Real Estate Prices

Abstract

Nowadays, the real estate prices in China have shown a continuous upward trend. Prices in the first-tier cities such as the north and the Guangzhou-Shenzhen are getting higher and higher, and ordinary people are becoming increasingly unaffordable. High housing prices have not only put pressure on people’s lives but also have had many adverse effects on China’s economic development. Many scholars at home and abroad think that the continuous rise of house prices is closely related to the flow of international short-term capital. International short-term capital when entering the Chinese market, because of its speculative easy to create a bubble, bringing huge risks. Through theoretical and empirical research, this paper analyzes whether the international short-term capital flows have an impact on house prices. Finally, it concludes that the inflow of international short-term funds to the real estate market in China has a positive impact on the real estate market in China, and to a certain extent, has promoted the real estate prices. The entry and exit of hot money have a great volatility effect on the real estate market, which has a great impact on the long-term, healthy and stable development of China’s real estate market.