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Home-Purchase Limits and Housing Prices: Evidence from China

Author

Listed:
  • Shijun Jia

    (Guangzhou University)

  • Yourong Wang

    (Central University of Finance and Economics)

  • Gang-Zhi Fan

    (Konkuk University)

Abstract

Home-purchase limits, introduced by China’s central government in April 2010 and afterward implemented by the local governments of major cities successively, were usually regarded as the most stringent policy instruments regulating over-heated Chinese housing markets over recent years. Our study attempts to investigate the effects of the home-purchase limits based on the micro data of resale housing transactions between January 2008 and December 2011 in Guangzhou city, one of the largest cities in mainland China. Our regression results show that, while the central government’s notice negatively affects housing prices, the localized home-purchase limit measures have positive effects on housing prices in Guangzhou, which deviate far from the expectations the policy makers might have. We also find that the effects of the policies are significantly stronger for the housing units of high-rise building (or with big size) relative to those without elevators (or with small size). We provide the explanation from the aspects of policy uncertainty and redevelopment option embodied in the housing.

Suggested Citation

  • Shijun Jia & Yourong Wang & Gang-Zhi Fan, 2018. "Home-Purchase Limits and Housing Prices: Evidence from China," The Journal of Real Estate Finance and Economics, Springer, vol. 56(3), pages 386-409, April.
    • Handle: RePEc:kap:jrefec:v:56:y:2018:i:3:d:10.1007_s11146-017-9615-2
    DOI: 10.1007/s11146-017-9615-2
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    3. Yongzhi Sun & Qiong Ma & Li Gan, 2024. "The Impact of Curbing Housing Speculation on Household Entrepreneurship in China," Sustainability, MDPI, vol. 16(5), pages 1-29, February.
    4. Lu, Zhentong & Zhang, Sisi & Hong, Jian, 2021. "Examining the impact of home purchase restrictions on China's housing market," China Economic Review, Elsevier, vol. 67(C).
    5. 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).
    6. Zhao, Renjie & Zhang, Jiakai, 2022. "Rent-tax substitution and its impact on firms: Evidence from housing purchase limits policy in China," Regional Science and Urban Economics, Elsevier, vol. 96(C).
    7. Huang, Naqun & Yang, Zhenlin, 2021. "Spatial dynamic models with short panels: Evaluating the impact of purchase restrictions on housing prices," Economic Modelling, Elsevier, vol. 103(C).
    8. Lan, Hao & Moreira, Fernando & Zhao, Sheng, 2023. "Can a house resale restriction policy curb speculation? Evidence from a quasi-natural experiment in China," International Review of Economics & Finance, Elsevier, vol. 83(C), pages 841-859.
    9. Abounoori , Esmaiel & Abdoh Tabrizi , Hossein & Mahmoodi , Nooshin, 2017. "The Effect of Divorce on Urban Housing Costs in Iran: A Spatial Autocorrelation Model," Journal of Money and Economy, Monetary and Banking Research Institute, Central Bank of the Islamic Republic of Iran, vol. 12(2), pages 107-122, April.
    10. Shi, Song & Zhang, Hong & Zhang, Jun, 2022. "The impact of a home purchase restrictions (HPR) policy on the distressed property market in Beijing," Journal of Housing Economics, Elsevier, vol. 58(PB).
    11. Taiyi Zang & Hongmei Gu, 2023. "State-Space Modeling of Housing Sentiment for Regressing Changes of Real Estate Prices Following Short-Term Control Policy in China," Sustainability, MDPI, vol. 15(16), pages 1-19, August.

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