Correlation Between Inflation and Real Estate Prices: Case Analysis of China and the United States

Abstract

Establishing economic theory suggests a correlation between inflation and asset prices, and real estate price is a typical form of asset prices. This study empirically examines real estate prices and inflation data in China and the United States from 2006 to 2023, drawing on existing economic theories and relevant data. The analysis reveals an inherent interaction mechanism between inflation and real estate prices in both countries. It is observed that fluctuations in real estate prices positively affect inflation in both China and the United States. However, the effect of inflation change on real estate prices is different between the two countries, as China's inflation rates exert a negative influence on real estate prices, contrasting with the situation in the United States. These results contribute to a deeper understanding of the intrinsic relationship between inflation rates and real estate prices, providing a theoretical basis for developing macroeconomic policies, enhancing inflation monitoring, and managing real economy markets.