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Household tenure choice and housing price volatility under a binding home-purchase limit policy constraint

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  • Chen, Jiawei
  • Hui, Eddie Chi-Man
  • Seiler, Michael J.
  • Zhang, Hong

Abstract

This study establishes a dynamic search-matching model with the home ownership market and rental markets unified within a single framework, against the background of China's home-purchase limit policy. We analyze the dynamic responses of household tenure choice, housing prices and market liquidity to a demographic shock. Our results show that, although the home-purchase limit policy can inhibit housing prices in the current period, the positive shock from demographic changes immediately triggers growth in rents and eventually leads to escalation in housing prices in subsequent periods.

Suggested Citation

  • Chen, Jiawei & Hui, Eddie Chi-Man & Seiler, Michael J. & Zhang, Hong, 2018. "Household tenure choice and housing price volatility under a binding home-purchase limit policy constraint," Journal of Housing Economics, Elsevier, vol. 41(C), pages 124-134.
    • Handle: RePEc:eee:jhouse:v:41:y:2018:i:c:p:124-134
    DOI: 10.1016/j.jhe.2018.06.004
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    Cited by:

    1. Nhlabathi Mthobisi & Mgiba Freddy Marilahimbilu & Ligaraba Neo, 2022. "Social Media Marketing Attributes, Sandton’s Rental Market Brand Image, and the Millennials’ Rental Preference: An Empirical Study," Real Estate Management and Valuation, Sciendo, vol. 30(1), pages 34-52, March.
    2. Shao, Xiaokuai & White, Alexander, 2021. "Outsiders, insiders and interventions in the housing market," Journal of Comparative Economics, Elsevier, vol. 49(1), pages 110-134.
    3. Zhou Jie & Chai Hua Qi, 2023. "An equilibrium analysis of the impact of real estate price volatility on macroeconomics based on ant colony algorithm," Journal of Combinatorial Optimization, Springer, vol. 45(2), pages 1-26, March.
    4. Zheng, Xian & Chen, Xingtao & Yuan, Ziqing, 2021. "Exploring the spatial spillover effect of home purchase restrictions on residential land prices based on the difference-in-differences approach: Evidence from 195 Chinese cities," Land Use Policy, Elsevier, vol. 102(C).

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    More about this item

    Keywords

    Household tenure choice; Home prices; Home-purchase limit policy; Search-matching model;
    All these keywords.

    JEL classification:

    • R20 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - General
    • R28 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Government Policy
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets
    • R38 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Government Policy

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