Casual Statistical Test for Real-estate and Rental Price in Mainland China—A Positive Research from City of Xi’an

Abstract

In the context of City of Xi`an in China, the paper aims to conduct an innate causal relationship between housing and rental price over the period 2000-2017. Based on the unrestricted error correction model (UECM) and statistical causality test, the co-integration tool is applied to probe the fluctuation mechanism within. The result provides evidence to support the hypothesis that residential real estate price and rental price are co-integrated, and there is no evidence of long-run causality from the two selected price at 95% level. The Granger causality results also supply support of market segmentation hypothesis that real estate price has no lead effect on rental price for residential market.