Housing Market In Beijing Research Articles

Estimation of tax incidence in Beijing housing market

ABSTRACT Capital gains tax (CGT) in China charges 20% of the profit from home resale, exempted only if the seller owns only one home and the seller has owned it for more than five years. This work estimates how CGT is shared between seller and buyer. By calculating the price differential between similar CGT-accrued housing units and CGT-exempt housing units and estimating CGT accrued, we find that approximately 50% of CGT is in fact transferred to the buyer. It should be noted that 50% is a lower bound of actual buyer incidence due to data limitations. Appreciating, liquid, quality housing units are associated with higher tax incidence for buyers. To address non-hedonic motives to sell, it is also shown that the price differential between CGT- accrued and CGT-exempt housing units is not a result of demand for liquidity or out of market conditions. This work suggests that regulators should be prudent in utilizing such tax as tools to deter speculation in the housing market.

The Capitalization of School Quality in Rents in the Beijing Housing Market: A Propensity Score Matching Method

In China, the capitalization of education resources in housing prices has been widely discussed. However, insufficient attention is paid to it in rents. Thus, this paper mainly aims to identify the capitalization of school quality in rents. It estimates a hedonic treatment effects model by introducing the propensity score matching (PSM) method. The empirical analysis is based on 49,438 rental transaction data of 2016–2018 in Beijing, China. It finds that school quality can be significantly capitalized in rents across different school quality (ranked as 1st-class, 2nd-class, and popular-class), space, and time. Besides, quality school density (the number of quality schools) within neighborhoods can significantly moderate the nearest school’s capitalization, promoting a 3.5% capitalization increase in outer municipal districts but a 3% decrease in inner districts. The popular-class schools can be capitalized into the rent of inner districts, probably because of other exogenous factors (e.g., housing prices, public transit). In addition, the equitable housing policy might show a potential risk in worsening social inequality between homeowners and renters in the municipal areas with high competition for 1st-class schools. In contrast, it may remedy such inequality in outer districts with less competition for quality schools.

The Impact of Measurement and Pricing Cost on Rental Transaction Prices – Evidence from the Institutional Rental Housing Market in Beijing

The Impact of Measurement and Pricing Cost on Rental Transaction Prices – Evidence from the Institutional Rental Housing Market in Beijing

Observational Learning and Information Disclosure in Search Markets

This paper studies the role of observational learning in search markets where buyers do not take the list price as a take-it-or-leave-it offer. Using a unique data from the Beijing housing market, we estimate a structural model in which buyers infer a seller’s reservation value from the home’s list price, time-on-market, and records of in-person home viewings by prior prospective buyers, after which they decide whether to view the home and how much to offer. We use the estimated model to quantify the welfare impact of different information disclosure rules. We find that buyer surplus is reduced, and seller surplus is increased on average if time-on-market information is disclosed. However, disclosing home-viewing information in addition to time-on-market information affects individual homes differently. We find that due to the disclosure of this additional information, buyers are slightly better off while sellers are slightly worse off on average.

House Age, Price and Rent: Implications from Land-Structure Decomposition

Big cities often witness land price outgrowing structure price. For such cities this paper derives two predictions regarding the dynamics between house prices, rent and structure age. First, older houses have a higher price growth rate than younger ones, even after controlling for location and other attributes; second, the age depreciation of house price, defined as the decline of house price with respect to house age, is slower than the similarly-defined age depreciation of rent. These hypotheses are supported by the micro-data on housing market in Beijing. These two inferences have implications for both real estate valuation and house price index construction.

House Age, Price and Rent: Implications from Land-Structure Decomposition

Big cities often witness land price outgrowing structure price. For such cities this paper derives two predictions regarding the dynamics between house price, rent and structure age. First, older houses have a higher price growth rate than younger ones, even after controlling for location and other attributes; second, the age depreciation of house price, defined as the decline of house price with respect to house age, is slower than the similarly-defined age depreciation of rent. These hypotheses are supported by the micro-data on housing market in Beijing. These two inferences have implications for both real estate valuation and house price index construction.

The rising demand for subway after private driving restriction: Evidence from Beijing's housing market

This paper studies to what extent subway demand increased after the Beijing city government imposed restrictions on private driving in October, 2008. Utilizing a pseudo-repeat sale approach in a short sample period that includes 6months before and after this exogenous shock, we mitigate the omitted variables problem, a common limitation in existing subway capitalization studies. We estimate the incremental effect of subway capitalization, and infer a 1.8 to 2.7 percentage point increase in people's willingness to pay for subway proximity, which is roughly 36% to 60% of the initial price premium for subway proximity. This increase is mainly due to the change in transportation mode following the driving restriction policy. We also find that the increase in demand for subway proximity exhibits significant spatial heterogeneity. Locations where subway travel time can better match that of car travel experience relatively higher housing price appreciation. Moreover, we find evidence that the increase in subway premium persists over time. Our estimation provides a basis for a sound cost–benefit analysis regarding how much and where the government should increase the supply of subway services after imposing restrictions on private driving.

Behavioural insights into housing relocation decisions: The effects of the Beijing Olympics

This article examines the impact of mega events on Beijing housing market from a behavioural perspective. By exploring the situation surrounding the Beijing 2008 Summer Olympics, we analyse the relationship between mega-event regeneration and expected residential relocation outcomes. Our findings suggest that Beijing Olympic regeneration caused disadvantaged groups to anticipate relocation to undesirable areas, as a result of improved infrastructure, public security, and urban environment. Behavioural sciences research indicates that expectation influences decision-making by serving as a salient reference point. Agents who perceived themselves as in a disadvantaged position or holding a gloomy prospect of their future are more likely to end up in such a situation. This paper offers insights into an effect of mega event regeneration projects that has been largely overlooked in the literature, i.e., the expected housing relocation outcomes. The research calls for government intervention and public attention to this important behavioural aspect of mega-event effects.

The housing market in Beijing and delays in sales: A fractional polynomial survival model

This paper analyzes housing sales delay in Beijing, China. In the housing market, new properties sometimes experience delays before they are sold. Such delays reflect the preferences of buyers with regard to the characteristics of the housing. Therefore, it is important for managerial purposes to identify the causes of housing sales delays. It is concluded that delays are largely explained by the dwellings' characteristics and location. Policy implications of the research findings, particularly those related to means of shortening the delays, are discussed.

Agent-Based Simulation of the Search Behavior in China's Resale Housing Market: Evidence from Beijing

In the paradigm of the search theory, we established the search model applicable to the characteristics of China's resale housing market, by modeling the search behavior for buyer and seller, respectively. Setting the parameters based on the Beijing housing market survey in August 2012, we implemented agent-based simulation to study the dynamics of the search behavior measured by search intensity and search time. Sensitivity test was also used to analyze the determinants of the search behavior for trading agents. The simulation results validate the idiosyncratic feature of the agent's search behavior, which is consistent with theoretical analysis. The increase of matching efficiency promotes the agents' search intensities, but the higher unit search cost can reduce the agents' search intensities. The buyer's search behavior is more sensitive to the change in the market tightness ratio. Brokerage service lowers the transaction price and lessens the agents' search intensities. Sensitivity test further reveals that, the matching efficiency and the market tightness ratio play very important role in improving housing market liquidity. The changes in the search cost and the broker commission rate can reduce the agents' search intensities significantly and there are critical turning points at which the abrupt change occurs.

Location-Dominant Housing Markets: Evidence from Beijing

This paper analyzes price tradeoffs between residential quality and location factors in the Beijing housing market. Unlike most housing markets, location factors completely dominate housing prices in this market. The main reason for this appears to be the physical size of central Beijing, where travel times between different urban activity centers are comparable to typical suburban-urban commuting times in large Western cities. To highlight these location-dominance effects, we present a comparative analysis of housing prices in central Beijing with those of the relatively smaller monocentric city of Qingdao in Eastern China. The main results of this regression analysis are to show that location accessibility factors are far more dominant in Beijing, and conversely that residential quality factors are more important in Qingdao. To further illuminate these differences, we develop a simple two-city model in which the “Big” city has multiple activity centers with travel costs comparable to typical commuting costs in the “Small” city. Here it is shown that the resulting bid-price relations between these cities are quite consistent with our empirical findings.

Multi-agent simulation of the dynamic evolutionary process in Chinese urban housing market based on the GIS: The case of Beijing

Abstract In order to analyze the dynamic evolutionary process of Chinese emerging housing market, the paper defines the behavioral functions of household agents in terms of demand generation, information search and price negotiation, and incorporates multi-agent technique and geographic information system to conduct a series of simulation studies on Beijing housing market. By setting different market scenarios, the impacts of new housing supply and information level on Beijing housing market are addressed. The findings show that, Beijing housing market is characterized by the prominent urban expansion with the formation of consolidated residential zones outside the 5th ring road; the growth in new housing supply can reduce the buyer search duration significantly, and lead the buyer search flow to the new housing market; higher information level can increase the sales of resale housing market, but inhibit the sales and time on market for new-built houses to some extent.

An Empirical Analysis of House Price Bubble: A Case Study of Beijing Housing Market

Increases in house prices can lead to higher house price volatility, a significant determinant of default and the prepayment of housing loans (Miles, 2008). Many researchers believe that significant growth in house price has the potential to generate a house price bubble. The bursting of a house price bubble is likely to endanger the stability of the country’s real economy. China experienced substantial increases in house prices at the end of 1990s. In Beijing, house prices increased dramatically following the liberalization of China’s housing market in 1998, and especially so after reforms in 2004. The significant growth of Beijing house prices could have generated a house price bubble, thus endangering the stability of the Beijing housing market and thereby the overall Chinese economy. This paper investigates whether a bubble existed in the Beijing housing market from 1998 to 2010, using economic fundamental variables such as interest rates, inflation, and cost of supply. Results of the analysis revealed that the Beijing house price index was significantly larger than the equilibrium value, based on the relative economic fundamental variables (income, inflation, interest rate and construction cost) during 2004 to 2007. This result is similar to the findings of Hou (2009), where nearly 75 percent of the changes in Beijing house price were thought to be explained by the economic variables used in the models.

Challenges facing housing affordability in Beijing in the twenty‐first century

PurposeThe purpose of this paper is analyse to what extent the high price had led to low levels of housing affordability in the period 2002‐2006 in Beijing. Due to the importance of housing for local residents and the crucial position that real estate market in the Chinese economy is currently in, research into the housing affordability issues is now essential. It is important to consider the social circumstances that are predominantly related to both the standard of living and the national economy in Beijing.Design/methodology/approachThe housing price to income ratio (PIR) method and Housing Affordability Index (HAI) model are used to measure housing affordability in Beijing. Then, the reasons for the high housing prices in Beijing are discussed and government homeownership‐oriented policies to help citizen on housing issues are examined. Finally, future proposals which can contribute to ease the housing affordability problem are recommended.FindingsThe main findings in this research are that the PIR in the Beijing housing market (based on an average gross floor area of 60 m2) fluctuated between 6.69 and 9.12, respectively, between 2002 and 2006. Over the same period, the HAI was approximately 75 between 2002 and 2004, although decreasing sharply in 2005 (65.78) and 2006 (51.33). It appears that the Chinese government's new housing provision policies may be able to ease this affordability problem, especially with regards to the economic housing scheme.Originality/valueChina has experienced rapid growth in gross domestic product (GDP) with a substantial increase in house prices which have affected housing affordability for typical Beijing households. Since the housing reform in China commenced in 1998, Beijing residents, government officers and academics have been concerned about high housing prices in the city, which is considered beyond the buying capability of the ordinary residents. The results are designed to provide an insight into the level of housing affordability in Beijing and whether a trend exists.

Land and residential property markets in a booming economy: New evidence from Beijing

Beijing's housing market has boomed over the last fifteen years. The city's population grew by 40.6% and per capita income (in constant RMB) by 273.9% from 1991 to 2005. Using two geocoded data sets, we present new evidence on the real estate price gradient, land price gradient, population densities, and building densities in Beijing's recent free housing market. The classic urban monocentric model's predictions are largely upheld in Beijing. We also document the importance of local public goods, such as access to public transit infrastructure, core high schools, clean air, and major universities, most of which have exogenous locations, as important determinants of real estate prices.

Land and Residential Property Markets in a Booming Economy: New Evidence from Beijing

Beijing's housing market has boomed over the last fifteen years. Its population has grown by 40.6% and per-capita income (in constant RMB) has grown by 273.9% from 1991 to 2005. We study recent patterns in Beijing's free market housing market. Using two geocoded data sets, we present new evidence on the real estate price gradient, land price gradient, population densities and building densities. The classic urban monocentric model's predictions are largely upheld in Beijing. We also document the importance of local public goods such as access to public transit infrastructure, clean air and major universities as important determinants of real estate prices.

A Theory of Price Control

PRICE or rent control is but one of many forms of legislative action which interfere with private contracting in the market place. To delimit the scope of my analysis, I shall use the term "price control" to refer only to any set of regulations which satisfies the following three conditions. First, the control must fix the price (or income)' terms of private contracts; this categorically excludes any laws which regulate the distribution of income among the contracting parties on a share or percentage basis.2 Second, the control must involve no appropriation of proceeds to or from the government; taxation and subsidization are thus excluded. Finally, the fixing of price must not be associated with direct government sales, purchases, or manipulation of resources so as to maintain the regulated price;3 by this stipulation, price "support" is also excluded. Even on such terms, legal regulations to control price are still many and varied. To evaluate our understanding of the class of phenomena which we seek to explain it is essential that we discover implications refutable by facts. By this criterion the available body of economic theory pertaining to price control is deficient indeed: the massive literature on the subject offers few such implications.4 An alternative approach to analyzing the observable effects of price control is presented here.