Examining the impact of home purchase restrictions on China's housing market

Zhentong Lu, Sisi Zhang and Jian Hong

China Economic Review, 2021, vol. 67, issue C

Abstract: This paper studies the impact of home purchase restrictions on China's housing market. We estimate a structural model of household preference for housing, real estate developers' pricing decisions, and equilibrium market outcome in five large cities. By comparing the estimation results from pre- and post-policy intervention, we find that, after home purchase restrictions are implemented, overall housing demand in most cities becomes weaker and less price elastic; meanwhile, real estate developers face higher holding costs and thus are willing to lower prices and sell more quickly. Counterfactual analyses show that in some cities alternative policy designs that cause less structural change of demand could achieve larger consumer welfare and social welfare than the implemented policy.

Keywords: Housing demand; Housing supply; Home purchase restrictions; Structural model (search for similar items in EconPapers)
JEL-codes: O18 R31 R38 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:chieco:v:67:y:2021:i:c:s1043951x21000389

DOI: 10.1016/j.chieco.2021.101620

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