Effects of house-sale restrictions in China: a difference-in-difference approach

ABSTRACT

Chinese housing prices have increased rapidly in recent years. Concerned about the potential for a burst bubble, the Chinese government has been intervening in the market to rein in the rising price trend since 2010. In March 2017, a new housing policy, called house-sale restriction, was developed to curtail speculation in the Chinese housing market. This study uses a difference-in-difference model to examine the policy effect of this new restriction. By using house-sale and price data of 43 cities across 30 provinces in China, we find that house-sale restrictions could effectively reduce speculation in the market as well as decrease housing prices in the short term. This study analyses only the short-term effect of this new housing policy; the long-term effect requires further examination.

KEYWORDS:

• Housing market
• house-sale restriction
• difference-in-difference model
• propensity score matching model

JEL CLASSIFICATION:

• C33
• E44
• G18

Disclosure statement

No potential conflict of interest was reported by the authors.