Energy Price Fluctuation and Real Estate Market Risk Prevention—Empirical Evidence at the Prefecture-Level City Level in China

Wang Zhenxia, Yan Bingqian and Wang Lei ()
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Wang Zhenxia: National Academy of Economic Strategy, Chinese Academy of Social Sciences Beijing China
Yan Bingqian: National Academy of Economic Strategy, Chinese Academy of Social Sciences Beijing China
Wang Lei: Institute of Industrial Economics, Chinese Academy of Social Sciences Beijing China

China Finance and Economic Review, 2024, vol. 13, issue 2, 3-25

Abstract: The impact of energy price fluctuation on the macro economy is a hot issue that is continuously concerned by the academic community, but few literature have paid attention to the impact of energy price fluctuation on housing price and the financial risks that may arise. Based on the data of cities at and above the prefecture level in China, this paper empirically examines the impact of energy price fluctuation on the price fluctuation of the domestic real estate, and analyzes its influencing mechanism and transmission pathways. The results show that changes of energy price will significantly affect the fluctuation of domestic real estate price, and it is more obvious in large cities and megacities. Energy price affect the demand for housing through changes of interest rate levels on the one hand, and the supply of the real estate market through the cost of housing construction on the other hand, which leads to housing price fluctuation. After a series of robustness tests, the results are still valid. At the same time, the effect is asymmetric, that is, higher energy price increases the fluctuation of house price, but the impact of falling energy price is not significant. Therefore, when preventing real estate market risks, energy price should be considered as a forward-looking indicator to focus on, and the regulation and control policies of the real estate market should be scientifically formulated. This paper not only provides a new perspective on the mechanism of housing price formation, but also enriches the research on the interconnection between energy and financial markets.

Keywords: energy price; real estate price; financial risk (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:bpj:cferev:v:13:y:2024:i:2:p:3-25:n:1001

DOI: 10.1515/cfer-2024-0007

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