The impact of monetary policy on real estate prices in China

Abstract

This thesis examines the impact of China's monetary policy on real estate prices and regional differences from 2003 to 2023. Using theoretical analysis, trend analysis, and comparative analysis of 42 cities across four tiers (first-tier, new first-tier, second-tier, and third-tier cities), the study finds that monetary policy affects housing prices through quantity-based channels (money supply and credit) and price-based channels (interest rates). The results show that first-tier and new first-tier cities are more sensitive to monetary policy due to their economic advantages and higher investment demand, whereas second- and third-tier cities respond more slowly and are more influenced by local population and income levels. The study concludes that differences in economic development, demand structure, and policy transmission efficiency are the core reasons for housing price divergence across city tiers.