Abstract
The housing market plays an important role in the Chinese economy and society. To promote the functioning of the housing market, the Chinese government has imposed many policies and regulations. However, most of these regulations do not take sustainability into consideration. Using a difference-in-difference approach, this paper investigated the impacts of home purchase restriction (HPR) on the housing market in China. While most studies have only focused on the impacts of HPR implementation on the housing market, we also investigated the effects of HPR removal. The results revealed that HPR brings about a decline in the growth of house prices and the impacts are more significant in the short run. Furthermore, the effects of HPR vary across different cities., where they are particularly pronounced in the central and western cities. Moreover, there was no evidence to show that the removal of HPR affected house prices as expected. This suggests that it is important to improve the sustainability of housing policies, which has significant policy implications for obtaining a well-functioning housing market.
Highlights
House prices have grown rapidly in China in recent years [1], which has had profound impacts on society and the economy [2,3,4,5,6,7,8]
In order to build up a long-term regulation mechanism and improve the functioning of the housing market, it is important to understand the effects of policy sustainability in the housing market
There is scarce evidence of the effects of home purchase restriction (HPR) dynamics, especially of the effects of HPR removal on the housing market. This is important because the existing literature shows that policy uncertainty and dynamics are associated with house prices [24]
Summary
House prices have grown rapidly in China in recent years [1], which has had profound impacts on society and the economy [2,3,4,5,6,7,8]. In order to build up a long-term regulation mechanism and improve the functioning of the housing market, it is important to understand the effects of policy sustainability in the housing market. We use HPR as an example of housing policy and study the impacts of HPR dynamics on the housing market. Based on the analysis of HPR, our second objective was to study the effects of sustainability policy in the housing market. This has important policy implications and practical significance because the understanding the effects of sustainability policy is essential in establishing a long-term regulation mechanism and promoting the functioning of the housing market.
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