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The effect of gasoline prices on suburban housing values in China

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  • Tong Zhang
  • Paul J. Burke

Abstract

By raising road transportation costs, an increase in gasoline prices should be expected to reduce housing demand in locations further from the central business district (CBD) relative to inner-city locations. This study uses a monthly real estate area-level dataset for 19 large cities in China over 2010–2018 to investigate the impact of gasoline prices on intra-city spatial differentials in housing prices. The findings suggest that higher gasoline prices on average lead to a relative decline in housing prices in outer suburbs, with a 1% increase in gasoline prices on average leading to a 0.004% relative reduction in home values for every additional kilometer from the CBD. The effect is larger in cities that have higher automobile ownership rates and that are less densely populated. The results are consistent with a conclusion that the rise of electric vehicles, autonomous vehicles, and working from home is likely to contribute to a lowering of geographical price differentials within Chinese cities over time.

Suggested Citation

  • Tong Zhang & Paul J. Burke, 2022. "The effect of gasoline prices on suburban housing values in China," Departmental Working Papers 2022-01, The Australian National University, Arndt-Corden Department of Economics.
    • Handle: RePEc:pas:papers:2022-01
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    Cited by:

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    2. Cui, Jian & Yang, Hanfang & Wang, Yifan & Yang, Caili, 2023. "Dynamics of the gas retail market under China's price cap regulation," Energy Policy, Elsevier, vol. 174(C).

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    More about this item

    Keywords

    gasoline price; housing price; transportation cost.;
    All these keywords.

    JEL classification:

    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy

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