Rationality test in the housing market: Project‐level evidence from China

Yifan Chen, Jianhua Gang, Zongxin Qian and Jinfan Zhang

Journal of Regional Science, 2023, vol. 63, issue 3, 583-616

Abstract: We test whether investors rationally react to rent news when pricing houses. Previous literature on house pricing uses aggregated housing price and rent data to estimate the rent news. We analytically demonstrate that using aggregated data biases the rationality test because it forces researchers to estimate the rent news using the cross‐project average dynamic relationship among the housing return, rent growth, and macroeconomic dynamics and, hence, misses the heterogeneity in the dynamic relationship. Our empirical tests using proprietary project‐level housing data from China's megacities find that the bias from missing the heterogeneity is economically substantial.

Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://doi.org/10.1111/jors.12632

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:jregsc:v:63:y:2023:i:3:p:583-616

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0022-4146

Access Statistics for this article

Journal of Regional Science is currently edited by Marlon G. Boarnet, Matthew Kahn and Mark D. Partridge

More articles in Journal of Regional Science from Wiley Blackwell
Bibliographic data for series maintained by Wiley Content Delivery ().