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Housing price and household savings rates: evidence from China

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  • Shi Li
  • John Whalley
  • Xiliang Zhao

Abstract

This article investigates the effect of house prices on household savings rates in urban China employing the 2002 and 2007 data of the Chinese Households Income Project (CHIP). We find that the rapid appreciation of house prices cannot explain high Chinese households' savings rates and the rising of Chinese savings rates. On the contrary, we find a negative relationship between house prices and household savings rates for home renters and homeowners. We do not find any evidence of 'savings for housing purchase' for young home renters when house prices increase. Their savings rates declined during housing market booms in recent 10 years. Savings rates of homeowners possessing multiple housing have decreased more because of 'the pure housing wealth effects.'

Suggested Citation

  • Shi Li & John Whalley & Xiliang Zhao, 2013. "Housing price and household savings rates: evidence from China," Journal of Chinese Economic and Business Studies, Taylor & Francis Journals, vol. 11(3), pages 197-217, August.
    • Handle: RePEc:taf:jocebs:v:11:y:2013:i:3:p:197-217
    DOI: 10.1080/14765284.2013.814461
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    References listed on IDEAS

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    4. Shang-Jin Wei & Xiaobo Zhang, 2011. "The Competitive Saving Motive: Evidence from Rising Sex Ratios and Savings Rates in China," Journal of Political Economy, University of Chicago Press, vol. 119(3), pages 511-564.
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    6. Hilary W. Hoynes & Daniel L. McFadden, 1996. "The Impact of Demographics on Housing and Nonhousing Wealth in the United States," NBER Chapters, in: The Economic Effects of Aging in the United States and Japan, pages 153-194, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Song, Zhongchen & Coupé, Tom & Reed, W. Robert, 2021. "Estimating the effect of the one-child policy on Chinese household savings - Evidence from an Oaxaca decomposition," China Economic Review, Elsevier, vol. 66(C).
    2. Zhongchen Song & Tom Coupe & W. Robert Reed, 2019. "The One-Child Policy and Chinese Saving Behavior," Working Papers in Economics 19/10, University of Canterbury, Department of Economics and Finance.
    3. Ya Gao & Xiuting Li & Jichang Dong, 2019. "Does Housing Policy Sustainability Matter? Evidence from China," Sustainability, MDPI, vol. 11(17), pages 1-17, August.
    4. Kang, Hsin-Hong & Liu, Shu-Bing, 2014. "The impact of the 2008 financial crisis on housing prices in China and Taiwan: A quantile regression analysis," Economic Modelling, Elsevier, vol. 42(C), pages 356-362.
    5. Jie Chen & William Hardin & Mingzhi Hu, 2020. "Housing, Wealth, Income and Consumption: China and Homeownership Heterogeneity," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 48(2), pages 373-405, June.

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