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How is housing purchase intention related to consumption? The role of market sentiment

Author

Listed:
  • Zhaoyingzi Dong
  • Eddie C. M. Hui
  • Daichun Yi
  • Weiwen Zhang

Abstract

Recent literature has widely discussed how housing price is linked to consumption and tenure choices, while tended to ignore that consumption and tenure choices are inter-correlated. This study employs the simultaneous equation model to explore how the housing purchase intention affects the non-housing consumption, considering the role of housing market sentiment. The result shows, on average, the housing purchase intention is associated with higher non-housing consumption, and a higher sentiment magnifies this positive relationship. Housing price level and growth decrease the household’s enthusiasm of purchasing a new house, while sentiment is positively related to the housing purchase intention. Renters’ behavior is less likely be affected by sentiment. In addition, the heterogeneous analysis indicates that households face a trade-off between housing and certain kinds of commodities. This study has some significant, practical implications on optimizing households’ wealth allocation, implementing housing policy and improving the social welfare.

Suggested Citation

  • Zhaoyingzi Dong & Eddie C. M. Hui & Daichun Yi & Weiwen Zhang, 2024. "How is housing purchase intention related to consumption? The role of market sentiment," Housing Studies, Taylor & Francis Journals, vol. 39(4), pages 1087-1104, April.
    • Handle: RePEc:taf:chosxx:v:39:y:2024:i:4:p:1087-1104
    DOI: 10.1080/02673037.2022.2101628
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