Housing market networks in China's major cities: a conditional causality approach

Lu Yang, Nannan Yuan and Shichao Hu

International Journal of Emerging Markets, 2021, vol. 17, issue 9, 2166-2185

Abstract: Purpose - To explore the state of this conditional Granger causality when other cities are not factors, we investigate housing market networks in China's major cities by using a combination of conditional Granger causality and network analysis. Design/methodology/approach - Although housing market networks have been well discussed for different countries, the question of housing market networks in China's major cities based on the conditional causality perspective has yet to be answered. Findings - We discover that second-tier cities are more influential than first-tier cities. Although the connectivity of the primary housing market is more complex than the diversified connectivity observed in the secondary housing market, both markets are scale-free networks that exhibit high stability. Moreover, we reveal that geographic conditions and economic development jointly determine the housing market's modular hierarchical structure. Our results provide meaningful information for both Chinese policymakers and investors. Originality/value - By excluding the influence of other cities, our conditional Granger causality identifies the true casual relation between cities' housing markets. Moreover, it is the first paper to consider the primary housing market and secondary housing market separately. Specifically, Chinese prefer new house rather than second-hand house from both speculative and self-housing. Generally speaking, the new house price is lower than the second-hand house price since the new house is off-plan property. Therefore, understanding the difference between primary and secondary housing markets will provide useful information for both policymakers and speculators.

Keywords: Conditional granger causality; Primary housing market; Secondary housing market; Network analysis; Information spillover; Ripple effect (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:eme:ijoemp:ijoem-05-2020-0573

DOI: 10.1108/IJOEM-05-2020-0573

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