The Impact of Exogenous Demand Shock on the Housing Market: Evidence from the Home Purchase Restriction Policy in the People’s Republic of China

Xiaping Cao, Bihong Huang and Rose Neng Lai
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Xiaping Cao: Asian Development Bank Institute
Bihong Huang: Asian Development Bank Institute

No 824, ADBI Working Papers from Asian Development Bank Institute

Abstract: To deal with the rampant increase in housing prices, the Government of the PRC implemented the home purchase restriction (HPR) policy to curb speculation and prevent housing bubbles. This policy triggered an exogenous demand shock to the housing market. Employing a two-step difference-in-differences approach, we find significantly negative policy effects on property transaction volume but a small impact on housing prices. Cities that rely heavily on land sales for fiscal revenue experience a considerably higher increase in property investments after implementing the HPR policy.

Keywords: home purchase restriction policy; demand shock; housing bubble; land financing (search for similar items in EconPapers)
JEL-codes: G12 G18 H83 (search for similar items in EconPapers)
Pages: 29 pages
Date: 2018-03-19
New Economics Papers: this item is included in nep-cna, nep-knm, nep-tra and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:ris:adbiwp:0824

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