The Estimation and Determinants of the Price Elasticity of Housing Supply: Evidence from China

Abstract

This paper provides a first look at estimates of the price elasticity of the housing supply in China at both the national and city levels. Using a panel dataset consisting of 35 cities in China from 1998 to 2009, the findings show that the implied national price elasticity of housing supply is between 2.8 and 5.6. The city-level analysis reveals that geographic, economic as well as regulatory factors are significant determinants of the variation in the observed price elasticity of housing supply. The study of a different regulatory and economic environment contributes to the growing literature on supply elasticity and helps explain the seemingly wide variation in supply elasticities observed across cities and countries.