Research on the Impact of Housing Price Changes on Residential Consumption under the Dual Cycle based on a Dynamic Local Equilibrium Model

Based on the heterogeneity of consumers, this paper constructs a dynamic local equilibrium model of consumers, deduces the Euler equation of total consumption, and adds the factor of consumption habits to reevaluate the equilibrium relationship. Based on the annual panel data of 31 provinces (municipalities directly under the Central Government and autonomous regions) in China, the parameters of friction-free model and consumption habit model are estimated by using CCE method and CCEMG method respectively. The results show that the calculation method of inflation and the selection of index system of short-term and long-term interest rates do not change the crowding out effect of housing price rise on consumption. When considering consumption habits, although interest rate growth rate and housing price growth rate have a negative impact on consumption growth rate, the impact of these two factors on consumption is not significant; consumption habits and income become significant factors affecting consumption level. To sum up, this paper puts forward policy suggestions to improve the realization mechanism of real estate value appreciation, guide residents to form consumption habits, differentiate housing regulation policies, and increase residents' sustainable income.