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Revisiting the determinants of house prices in China's megacities: cross-sectional heterogeneity, interdependencies and spillovers

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  • Liu, Chunping

    (Nottingham Trent University)

  • Ou, Zhirong

    (Cardiff Business School)

Abstract

We revisit the determinants of house prices in China s megacities. Previous work on similar topics fails to account for the widespread cross-sectional heterogeneity and interdependencies, despite the importance of them. Using a PVAR estimated by the Bayesian method allowing for these features, we nd each city is rather unique, especially on the extent to which local house prices are disturbed by external house price shocks. The spillovers are mainly due to direct housing market interdependence, which seems related more to demand before 2010, but more to supply thereafter due to property purchase restrictions. The new evidence we establish therefore suggests that city-level stabilisation of house prices should fully respect local features, including how local markets respond to external disturbances.

Suggested Citation

  • Liu, Chunping & Ou, Zhirong, 2021. "Revisiting the determinants of house prices in China's megacities: cross-sectional heterogeneity, interdependencies and spillovers," Cardiff Economics Working Papers E2021/4, Cardiff University, Cardiff Business School, Economics Section.
    • Handle: RePEc:cdf:wpaper:2021/4
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    More about this item

    Keywords

    House price; Chinese megacities; PVAR; cross-sectional heterogeneity and interdependencies;
    All these keywords.

    JEL classification:

    • C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Bayesian Analysis: General
    • R15 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Econometric and Input-Output Models; Other Methods
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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