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Bad news travels fast: Network analysis of the Chinese housing market connectivity

Author

Listed:
  • Xu, Xiaoyue
  • Mi, Anran
  • Li, Xiuting
  • Li, Xuerong
  • Dong, Jichang

Abstract

Starting with the housing markets of large and medium-sized cities in China, this paper constructs housing market networks with the data of both the price index and the trading volume, and finds the overall decreasing trend of the connectivity of the networks. The analysis of the network characteristics reflected by the indices established in this paper reveals the extreme high level of global network indicators in the first quarter of 2015 and the first quarter of 2020, demonstrating the phenomenon of “bad news traveling fast”, which can be explained from the perspective of information dissemination and herding behavior. Further empirical analysis shows the negative impact on housing market connectivity from both macroeconomic conditions and the frequency of stock market transactions. Based on the findings, this paper makes policy recommendations for preventing systemic risk in the housing market from the perspective of information dissemination and macroeconomics.

Suggested Citation

  • Xu, Xiaoyue & Mi, Anran & Li, Xiuting & Li, Xuerong & Dong, Jichang, 2024. "Bad news travels fast: Network analysis of the Chinese housing market connectivity," China Economic Review, Elsevier, vol. 84(C).
    • Handle: RePEc:eee:chieco:v:84:y:2024:i:c:s1043951x24000208
    DOI: 10.1016/j.chieco.2024.102131
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