Analysis of the Effectiveness of Real Estate Market to Household Consumption under Macro-control Policy

Abstract

Housing has become an important part of household wealth in China. On the one hand, it can promote household consumption through the wealth effect, on the other hand, it may reduce household consumption due to the "house slave effect". Throughout the research process of housing assets, most scholars study the horizontal level, through the data tracking of different families, to explore the impact of housing assets on household consumption. Based on the data from China Household Finance Survey from 2011 to 2019, this paper constructs a balanced panel, and uses OLS and fixed effect model to analyze the impact of housing asset appreciation on household consumption. The results show that the appreciation of housing assets can promote household consumption. In the heterogeneity analysis, for the families with only one suite, the housing is mostly to meet the living demand, and the role of housing assets in promoting consumption is small. In addition, for families in the central and western regions, under the influence of housing asset appreciation, the level of household consumption is higher. Mechanism analysis shows that the appreciation of housing assets alleviates household credit and makes households smooth consumption by borrowing. The policy implications of this paper are: to strengthen the implementation of "purchase restriction", improve the proportion of public participation in macro-control, and further improve the real estate industry supervision system.