Inflation-hedging properties of regional Chinese real estate market: evidence from 35 cities in China

Yi Wu and Owen Tidwell

Applied Economics, 2015, vol. 47, issue 60, 6580-6598

Abstract: The housing markets in China have been gaining considerable interest from investors, but the inflation-hedging characteristics of housing remain ambiguous. Based on Chinese city-level data, this study evaluates different inflation-hedging properties in eastern, middle and western real estate markets using panel vector autoregressive (PVAR) models. Findings suggest middle real estate markets afford the best hedging opportunities for expected inflation, which is robust considering housing market heterogeneity, financial crisis and the 2010 purchase restriction order. Moreover, hedging efficacy of anticipated inflation differs between markets with low and high supply-demand ratio.

Date: 2015
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DOI: 10.1080/00036846.2015.1080811

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