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Do NEV subsidy cuts crowd out housing prices? Evidence from Shanghai, China

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  • Mai, Yuhang

Abstract

The interactions between transport policies and housing market, especially through subsidy adjustments, are not fully understood. This study investigates how Shanghai's 2016 new energy vehicle (NEV) subsidy cuts affected housing market by examining households' budget reallocation in response to the rising NEV costs. Using a difference-in-differences method and resold property transaction data, I find that properties in policy-affected areas decline by 4.38 % relative to the control group. The decline was most pronounced for middle-priced properties, aligning with the fact that middle-income households are the primary adopters of NEVs. Moreover, suburban properties were less affected than downtown ones. Analysis of household expenditure confirms that, following subsidy cuts, more households relocated budget from housing to vehicle through purchasing lower-unit-price properties. This study reveals a previously overlooked mechanism linking the transportation and real estate sectors, underscoring the need for policymakers to consider cross-sectoral budget shifts when designing economic stimulus measures.

Suggested Citation

  • Mai, Yuhang, 2026. "Do NEV subsidy cuts crowd out housing prices? Evidence from Shanghai, China," Transport Policy, Elsevier, vol. 179(C).
    • Handle: RePEc:eee:trapol:v:179:y:2026:i:c:s0967070x26000302
    DOI: 10.1016/j.tranpol.2026.104020
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    JEL classification:

    • R40 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Transportation Economics - - - General
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand

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