Examining the determinants of housing prices and the influence of the spatial–temporal interaction effect: The case of China during 2003–2016

Abstract

The slowdown of the Chinese economy has been accompanied by a recent rapid rise in housing prices, which has put severe pressure on China's high-quality development. Therefore, understanding the impact of the spatial–temporal interaction effect on housing prices and their potential determinants is critical for formulating housing policies and achieving sustainable urbanization. This study empirically analyzed both of these based on four aspects—the financial market, housing market, housing supply, and housing demand—using 2006–2013 data of 285 prefecture-level (and above) Chinese cities and spatial econometric models. The results indicated that the housing prices of Chinese cities were heavily affected by the interaction effect of space and time, both at the national and regional levels; however, the influence of this interaction effect exhibited a significant spatial differentiation, and only consistently drove up housing prices in Eastern and Western China. Additionally, the regional results based on administrative and economic development levels revealed that wage and medical service levels in first- and second-tier cities had negatively affected the competitiveness and efficiency of the Chinese economy during the investigation period. These findings suggest the need for land supply systems based on the increasing population to prevent housing prices from rising too quickly as well as policies that consider regional variations, accompanied by corresponding supporting measures.