The Health Consequence of Rising Housing Prices in China

Abstract

China has experienced a rapid boom in real estate prices in the last two decades, leading to a substantial increase in living costs and heavy financial burdens on households, which may subsequently induce health problems. This paper examines the health consequence of rising housing prices by exploiting spatial and temporal variation in housing price appreciation linked to individual-level health data in China from 2000 to 2011. Using an instrumental variable approach, we find robust evidence that increases in housing prices significantly raise the probability of residents having chronic diseases. This negative health impact is more pronounced among individuals from low-income families, households that purchased rather than inherited or were allocated the home, and individuals with a rural registry. Exploring various possible channels, we find that marriage market competition exacerbates the negative health effects, particularly for males and parents with young adult sons. We also find evidence that housing price appreciation induces negative health consequences through increased work intensity, higher mental stress, elevated tobacco use and reduced sleep time. This paper underlines the unintended health consequences of the real estate market prosperity.