Energy transition and housing market bubbles: Evidence from prefecture cities in China

Abstract

Governments are committing to realizing the energy transition to create a sustainable and resilient energy future, while less is known about the real effects of the energy transition on various sectors of the economy, particularly the tertiary industry. This paper thus investigates the relationship between the energy transition and housing market bubbles at the level of prefecture cities in China. We find that an increase in one standard deviation of the energy transition decreases approximately 39% of the average housing bubbles index. Furthermore, the digital economy and land transfer income of real estate enterprises could be underlying economic channels to significantly explain the impacts of the energy transition on housing market bubbles. Finally, we identify that green finance including green loans and green bonds enhances this negative effect on housing market bubbles. Our main result remains valid in a battery of robustness tests. This study provides important practical implications for policy makers, enterprises, and investors.