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The effects of macroprudential policies on house prices: Evidence from non-ordinary house purchasing policy using China real transaction data

Author

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  • LinLin, Sun
  • Yawen, Zhang
  • Xiaojun, Xue

Abstract

This paper contributes to the international policy debate on the effect of macroprudential policy on housing prices. Our identification relies on the fact that ordinary housing and non-ordinary housing in Beijing face different loan-to-value (LTV) restrictions and transaction tax rates. This paper uses regression discontinuity (RD) design to test whether the differentiated regulation of ordinary housing and non-ordinary housing caused a discontinuous change in housing prices with house-level transaction data. We find that housing prices have a significant discontinuous decline at the cutoff point caused by macroprudential policy, which we take 140 m2 s since it is the identification standard of non-ordinary housing. Further, we carry out RD-DID analysis to investigate the influence of loan-to-value (LTV) restrictions on housing prices. We find that around 2 % decline in house prices is caused by credit policy.

Suggested Citation

  • LinLin, Sun & Yawen, Zhang & Xiaojun, Xue, 2024. "The effects of macroprudential policies on house prices: Evidence from non-ordinary house purchasing policy using China real transaction data," Economic Analysis and Policy, Elsevier, vol. 84(C), pages 2086-2101.
    • Handle: RePEc:eee:ecanpo:v:84:y:2024:i:c:p:2086-2101
    DOI: 10.1016/j.eap.2024.10.057
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    More about this item

    Keywords

    Macroprudential policy; housing prices; ordinary housing; non-ordinary housing; loan-to-value (ltv) restrictions;
    All these keywords.

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • R38 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Government Policy

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