Impact of house price growth on mental health: Evidence from China.

Abstract

BackgroundHousing boom has raised global attention in the past two decades. A number of studies attempted to analyse the effect of house price increase. However, little is known about the health consequence as a result of housing boom, likely due to the scarcity of the data. The objective of this paper is to investigate the relationship between housing affordability and mental health as a result of house price increase.MethodsBased on a panel dataset of 32 Chinese cities from January 2013 to December 2017, we used a fixed effect model adjusting for per capita disposable income to estimate the impact of house price growth rate on mental health, and applied the Instrumental Variable (IV) method to address the endogeneity problem.ResultsFrom both Ordinary Least Squares (OLS) and IV estimations, the results suggested that a one standard deviation increase in house price increase rate in the past three months is associated with a 0.443 standard deviation increase in people consulting with doctors about their mental disorders in the city. This effect does not vary by gender, but was more pronounced in residents older than 40 years.ConclusionThese results revealed the potential negative consequences in people's mental health due to house price increase, necessitate appropriate policy responses.