The convergence of regional house prices in China

Abstract

This aim of this study was to determine the extent of any convergence in house prices across China, using a regional panel data set. The results showed little evidence of convergence across the regions, although there is evidence of a ripple effect starting in Shanghai, Guangzhou and Beijing, although only the former two regions are affected by the distance from them to the respective cities.

Keywords:

• convergence
• house price
• China
• ripple effect

JEL Classification:

• R3
• R5

Notes

¹  The link index is based on the same quarter of last year; for example, if HPI in the last quarter was 100 and it increased by 10% over the last 12 months, HPI in this quarter is 110. In this article, we need to transform the link index into the constant growth index (the first period index = 100); for example, if HPI in the first quarter is 100 and it increased by 10% in the next quarter, HPI in the second quarter is 110.

²  These unit root tests were also conducted on the house prices and produced the same result.