Home-Purchase Limits and Housing Prices: Evidence from China

Home-purchase limits, introduced by China’s central government in April 2010 and afterward implemented by the local governments of major cities successively, were usually regarded as the most stringent policy instruments regulating over-heated Chinese housing markets over recent years. Our study att...

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Bibliographic Details
Published in:The journal of real estate finance and economics 2018-04, Vol.56 (3), p.386-409
Main Authors: Jia, Shijun, Wang, Yourong, Fan, Gang-Zhi
Format: Article
Language:English
Subjects:
Central government
Cities
Economic models
Economics
Economics and Finance
Financial Services
Housing costs
Housing market
Housing prices
Local government
Policy making
Prices
Redevelopment
Regional/Spatial Science
Resale
Transactions
Uncertainty
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Summary:Home-purchase limits, introduced by China’s central government in April 2010 and afterward implemented by the local governments of major cities successively, were usually regarded as the most stringent policy instruments regulating over-heated Chinese housing markets over recent years. Our study attempts to investigate the effects of the home-purchase limits based on the micro data of resale housing transactions between January 2008 and December 2011 in Guangzhou city, one of the largest cities in mainland China. Our regression results show that, while the central government’s notice negatively affects housing prices, the localized home-purchase limit measures have positive effects on housing prices in Guangzhou, which deviate far from the expectations the policy makers might have. We also find that the effects of the policies are significantly stronger for the housing units of high-rise building (or with big size) relative to those without elevators (or with small size). We provide the explanation from the aspects of policy uncertainty and redevelopment option embodied in the housing.
ISSN:0895-5638
1573-045X
DOI:10.1007/s11146-017-9615-2