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The Impact of Housing Prices on the Upgrading of Consumption

In: Proceedings of the 2024 3rd International Conference on Public Service, Economic Management and Sustainable Development (PESD 2024)

Author

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  • Xibei Wang

    (The University of Sydney, Faculty of Arts and Social Sciences)

Abstract

This paper examines the relationship between urban residents’ consumption behavior and rising housing prices in China, focusing on how changes in housing prices affect consumption upgrading through the wealth effect and crowding-out effect. By synthesizing historical data and literature, this study reveals the impact of housing price fluctuations on residents’ purchasing power and wealth perception, and their changes in consumption patterns. Results indicate that in cities with higher incomes, rising housing prices may promote consumption upgrading through the wealth effect; however, in cities with lower incomes, high housing prices primarily suppress residents’ consumption capacity through the crowding-out effect, especially concerning non-essential goods and quality-of-life services. The paper also explores the housing price-to-income ratio in China compared to developed countries and offers policy recommendations based on the current real estate market conditions. This research provides valuable data support for policymakers and points out new directions for future studies on housing prices and consumption behavior.

Suggested Citation

  • Xibei Wang, 2024. "The Impact of Housing Prices on the Upgrading of Consumption," Advances in Economics, Business and Management Research, in: Qiujing Wu & Songsong Liu & Guoliang Wang & Jia Li (ed.), Proceedings of the 2024 3rd International Conference on Public Service, Economic Management and Sustainable Development (PESD 2024), pages 126-134, Springer.
    • Handle: RePEc:spr:advbcp:978-94-6463-598-0_15
    DOI: 10.2991/978-94-6463-598-0_15
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