What is the impact of RMB depreciation on housing prices?

Hello! Looking at the relevant analysis in the industry, it is generally believed that the role of RMB depreciation on housing prices mainly covers three aspects:

First, the liquidity effect.

The depreciation of RMB will reduce the profit margin of speculative capital, promote capital outflow, cause the shortage of domestic funds flowing to the real estate industry, and then change the current relationship between supply and demand of real estate. With the total supply of real estate unchanged, the impulse of real estate price rise will be restrained due to the lack of funds and demand support.

Second, the reverse wealth effect.

The depreciation of RMB will cause the price of imported goods to rise, which will lead to the decrease of imports, the increase of domestic commodity prices, the lack of social purchasing power, and the sluggish demand for real estate consumption, which will eventually form downward pressure on housing prices.

Third, the substitution effect.

In the case of RMB depreciation, the government will intervene in the market to maintain exchange rate stability, for example, by buying RMB and releasing US dollars to boost the RMB exchange rate, resulting in insufficient liquidity and curbing the rise of real estate prices.

Therefore, through the above analysis, we can find that in the stage of oversupply in the real estate market, RMB depreciation and RMB exchange rate decline will strengthen the revision of real estate prices, help break the market expectation of unilateral rise in the real estate market, avoid further accumulation of real estate bubbles, and be conducive to the healthy development of the real estate industry.