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Impact of government intervention in the housing market: evidence from the housing purchase restriction policy in China


  • Yi Wu
  • Yunong Li


In 2010, a housing purchase restriction policy was announced by China’s central government and implemented gradually by several prefecture governments. In this article, we empirically investigate this policy’s effect on the housing market. Using a difference-in-difference framework, we show that the housing purchase restriction policy reduces housing prices and transaction amounts but does not influence the housing investment or construction markets. Moreover, upstream industry suffers more than downstream industry. The results are robust to a battery of robustness checks. Heterogeneity exists across cities. We find that first- and second-tier cities as well as highly urbanized cities experience great declines in housing prices after the policy’s implementation, especially cites that had high housing prices in 2010 and cities with high real estate investment as a proportion of fixed asset investment. However, the housing policy is less effective in curbing speculative demand.

Suggested Citation

  • Yi Wu & Yunong Li, 2018. "Impact of government intervention in the housing market: evidence from the housing purchase restriction policy in China," Applied Economics, Taylor & Francis Journals, vol. 50(6), pages 691-705, February.
  • Handle: RePEc:taf:applec:v:50:y:2018:i:6:p:691-705
    DOI: 10.1080/00036846.2017.1340569

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    References listed on IDEAS

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    Cited by:

    1. Li, Yaoyao & Zhu, Daolin & Zhao, Jiangmeng & Zheng, Xiaodong & Zhang, Lanyue, 2020. "Effect of the housing purchase restriction policy on the Real Estate Market: Evidence from a typical suburb of Beijing, China," Land Use Policy, Elsevier, vol. 94(C).
    2. Ya Gao & Xiuting Li & Jichang Dong, 2019. "Does Housing Policy Sustainability Matter? Evidence from China," Sustainability, MDPI, Open Access Journal, vol. 11(17), pages 1-17, August.
    3. Guojun Zhang & Yunliang Chen & Ming Li & Chunshan Zhou, 2019. "Evaluation of Residential Housing Prices on the Internet: Data Pitfalls," Complexity, Hindawi, vol. 2019, pages 1-15, February.
    4. Xiaoqi Zhang & Yanqiao Zheng & Lei Sun & Qiwen Dai, 2019. "Urban Structure, Subway Systemand Housing Price: Evidence from Beijing and Hangzhou, China," Sustainability, MDPI, Open Access Journal, vol. 11(3), pages 1-23, January.

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