Numerical Computation of the Fluctuations of Commercial Housing Prices and Disposable Incomes of Urban Residents Based on the VAR and LSE Models

Abstract

To ensure the healthy development of the national real estate industry and explore the determinant of commercial housing prices in China, the correlation between fluctuations of commercial housing prices and disposable incomes of urban residents was analyzed and predicted with annual time series data based on Vector autoregressive (VAR) model. The study dealt with the bifactorial data and found positive correlations in both the empirical VAR model and the Least Squares Estimation (LSE) model. The Granger causality test and Cointegration tests were next carried out to verify the rationality of the empirical VAR model and its settings. The present study revealed that the urban resident disposable income was one of the crucial impact factors influencing the rising commercial housing prices. There exists a positive correlation or convergence relationship between the development trends of the commercial housing prices and the disposable incomes of urban residents on the basis of a fifteen years prediction by impulse response function. Finally, some comments and suggestions were put forward relevant to the corresponding policy adjustment and decision making of commercial housing market in view of the present empirical study.