Bad news travels fast: Network analysis of the Chinese housing market connectivity

Xiaoyue Xu, Anran Mi, Xiuting Li, Xuerong Li and Jichang Dong

China Economic Review, 2024, vol. 84, issue C

Abstract: Starting with the housing markets of large and medium-sized cities in China, this paper constructs housing market networks with the data of both the price index and the trading volume, and finds the overall decreasing trend of the connectivity of the networks. The analysis of the network characteristics reflected by the indices established in this paper reveals the extreme high level of global network indicators in the first quarter of 2015 and the first quarter of 2020, demonstrating the phenomenon of “bad news traveling fast”, which can be explained from the perspective of information dissemination and herding behavior. Further empirical analysis shows the negative impact on housing market connectivity from both macroeconomic conditions and the frequency of stock market transactions. Based on the findings, this paper makes policy recommendations for preventing systemic risk in the housing market from the perspective of information dissemination and macroeconomics.

Keywords: Housing market network; Network characteristic; Information dissemination; Herding behavior (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:chieco:v:84:y:2024:i:c:s1043951x24000208

DOI: 10.1016/j.chieco.2024.102131

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