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Revisiting the determinants of house prices in China’s megacities: Cross‐sectional heterogeneity, interdependencies and spillovers

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  • Chunping Liu
  • Zhirong Ou

Abstract

We revisit the determinants of house prices in China’s megacities. Previous work on similar topics fails to account for the widespread cross‐sectional heterogeneity and interdependencies, despite the importance of them. Using a PVAR estimated by the Bayesian method allowing for these features, we find each city is rather unique, especially on the extent to which local house prices are disturbed by external house price shocks. The spillovers may be partly related to the demand side before 2010, but seems more related to supply factors thereafter, due to the imposition of property purchase restrictions. The new evidence we establish therefore suggests that city‐level stabilisation of house prices should fully respect local features, including how local markets respond to external disturbances.

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  • Chunping Liu & Zhirong Ou, 2022. "Revisiting the determinants of house prices in China’s megacities: Cross‐sectional heterogeneity, interdependencies and spillovers," Manchester School, University of Manchester, vol. 90(3), pages 255-277, June.
    • Handle: RePEc:bla:manchs:v:90:y:2022:i:3:p:255-277
    DOI: 10.1111/manc.12397
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    More about this item

    JEL classification:

    • C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Bayesian Analysis: General
    • R15 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Econometric and Input-Output Models; Other Methods
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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