The effect of house price constraint conditions in land granting on the second-hand housing market: evidence from Beijing, China

Zixiao Chen, Kaiming Lei, He Huang and Hongyu Liu

Applied Economics, 2025, vol. 57, issue 54, 9230-9243

Abstract: To curb the surge in housing prices, Chinese governments have introduced various measures in the real estate market. House price constraint conditions (HPCCs) are conditions for sale in land granting which restrict the selling price of newly built houses. Such unique practice has been used as price regulation and signal in many cities with little understanding of its impact. This study aims to investigate the effectiveness, mechanism, and cost of HPCCs on the second-hand housing market for policy improvement, completing existing literature primarily focusing on housing policies. We collected data on land granting and second-hand house transactions in Beijing, which was the first to implement HPCCs. Employing difference-in-difference and other empirical techniques, we find that land granting with HPCCs alters buyers’ and sellers’ behaviours and expectations, leading to a significant decrease in the price level and growth rate. However, HPCCs are associated with lower supply, increased speculation, inequality issues, and potential loss of fiscal revenue. Policymakers need to improve HPCCs while considering market-oriented regulation tools.

Date: 2025
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DOI: 10.1080/00036846.2024.2412256

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