The Impact of the Real Estate Recession on China's Stock Market

Abstract

This paper makes a predictive analysis of the correlation between housing prices and CSI 300 index. The article selects the national average annual housing prices from 2006 to 2022 and the annual average index of China's CSI 300 Index from 2006 to 2022. The time series model was used to predict the future housing price trend and the impact of government policy is considered as well. Government factors are measured by the China Economic Uncertainty Index (CEPUI). In the absence of the government's regulation, China's housing prices in the next few years, will have a sharp decline. At the same time, the CSI 300 index will fall to the level of about 3000. When the government factor is added to the model, housing prices will only fall slightly, and the CSI 300 will remain basically unchanged. With the help of the government, Chinese house prices will fall slightly and the CSI 300 index will be basically unchanged. This paper provides empirical analysis for the study of the Chinese stock market.