To buy or not to buy: household risk hedging of housing costs

Shuo Liu, Jin Wang and Weixing Wu

Accounting and Finance, 2017, vol. 57, issue 5, 1417-1445

Abstract: This study studies Chinese households’ decision between buying or renting a primary residence from a risk hedging perspective. Although homeownership means bearing house price risk, it eliminates exposure to rent risk. Our empirical results suggest that the homeownership rate increases with the rent volatility of living areas and decreases with the probability of move. However, households no longer hedge against the rent risk when owning a second house, which is often purchased as an investment property. Furthermore, we investigate households with heads aged over 60. Due to finite life expectancy, the rent hedging benefit of owning is weakened.

Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://doi.org/10.1111/acfi.12333

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:acctfi:v:57:y:2017:i:5:p:1417-1445

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0810-5391

Access Statistics for this article

Accounting and Finance is currently edited by Robert Faff

More articles in Accounting and Finance from Accounting and Finance Association of Australia and New Zealand Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().