Exploring Chinese house prices affordability in the context of confucian culture

Fang Liu and Chen Liang

PLOS ONE, 2025, vol. 20, issue 6, 1-23

Abstract: Considering the notable influence of traditional Confucian culture on China’s housing market, this study introduces an innovative index to quantify the magnitude of the real estate bubble within China, employing a familial generational iterative model. Utilizing rent-buy policy as a conceptual framework, our research constructs a difference-in-differences model to investigate the impact of macroeconomic policies on the housing bubble phenomenon. Empirical observations from 2022 reveal pronounced bubble dynamics in first and second-tier cities, while housing prices in third and fourth-tier cities, alongside select fifth-tier cities, exhibit a declining trend. On a national scale, apart from minor affordability observed during 2005–2007, no significant affordability was identified in other years, with the housing price bubble index demonstrating a downward trajectory from 2020 to 2022. Furthermore, the implementation of the rent-buy policy that equality the rights of renter and owner has directly influenced the housing market, notably mitigating the overall escalation of housing prices. Additional analysis indicates that the rent-and-buy policy has been more successful in curbing price hikes in newly constructed and smaller-sized housing units compared to second-hand and larger-scale properties.

Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:plo:pone00:0325274

DOI: 10.1371/journal.pone.0325274

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