Housing price and credit environment: evidence from China

Yunjue Huang and Dezhu Ye ()
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Yunjue Huang: Zhaoqing University
Dezhu Ye: Jinan University

Palgrave Communications, 2025, vol. 12, issue 1, 1-11

Abstract: Abstract China’s prolonged real estate expansion has profoundly reshaped economic incentives and social structures, raising concerns about how housing price inflation may erode social trust and credit behavior. Using a novel dataset on city-level dishonest judgment debtors between 2003 and 2018, we examine how elevated housing prices shape the integrity of the social credit environment. Our results show that a 1000 CNY increase in housing prices per square meter is associated with a 4.5% rise in the share of dishonest firms. This relationship is particularly pronounced in higher-tier cities and among non-real estate firms, suggesting that the moral strain induced by unaffordable housing and unequal access to asset appreciation may distort credit behavior. Further analysis reveals that stronger legal enforcement and prevailing moral norms help attenuate this effect, while greater income inequality amplifies it. This highlights the complex interplay between asset inflation, institutional capacity, and social stratification in shaping the moral foundations of market behavior under rapidly urbanizing contexts. By tracing how asset-driven housing booms may undermine social ethics and creditworthiness, this research contributes to broader debates on the unintended institutional costs and social consequences of real estate expansion in emerging markets.

Date: 2025
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DOI: 10.1057/s41599-025-05539-8

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