Property Rights Uncertainty, Prices, and Speculation: Evidence from China's Housing Market

Hanming Fang (), Jing Wu () and Vincent Yao ()
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Hanming Fang: University of Pennsylvania and NBER
Jing Wu: Tsinghua University
Vincent Yao: Georgia State University

PIER Working Paper Archive from Penn Institute for Economic Research, Department of Economics, University of Pennsylvania

Abstract: We examine the causal effect of uncertainty in property rights on housing prices and speculative behavior. We take advantage of a distinctive setting in Shenzhen, China, where neighboring residential units that are otherwise similar dier in the strength of their property rights protections. Some units have full property rights (FPR) with a 70-year leasehold, whereas others have only limited property rights (LPR) protections. Using detailed listing data, we find that the sales market prices these protections, while the rental market does not. Our estimates imply that the perceived probability that FPR rights could be questioned at the end of the 70-year term is between 7% and 21%, and that the probability the LPR receives no legal protection in any future year exceeds 50%. We further show that LPR units are more susceptible to speculation, as reflected in higher turnover and greater price volatility. Lastly, we show that the public release of new urban planning codes raises listing prices and lowers turnover and price volatility for LPR properties relative to matched FPR units.

Keywords: Property Rights; Housing Prices; Speculative Activities; Urban Planning Codes (search for similar items in EconPapers)
JEL-codes: G11 G12 R30 (search for similar items in EconPapers)
Pages: 42 pages
Date: 2026
New Economics Papers: this item is included in nep-hre and nep-uep
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