Housing Price and Population Growth across China: The Role of Housing Supply

Wang, Hongbo and Rickman, Dan S. (2017): Housing Price and Population Growth across China: The Role of Housing Supply.

Abstract

In this paper, we employ a spatial equilibrium growth model to examine the role of housing supply for differences in housing price and population growth across the provinces, autonomous regions and municipalities of mainland China for 1999-2013. A distinguishing feature of the model used from other spatial equilibrium models is a time-varying and regionally-varying elasticity of housing supply. Regions in the East are found to have had the most inelastic housing supply, while northern regions had the most elastic housing supply. The differences in exogenous housing supply growth are shown to have significantly affected relative regional population growth over the period, suggesting that housing policies can be used to promote growth.

• Item Type: MPRA Paper
• Language: English
• Keywords: Housing supply; China; Spatial equilibrium
• Subjects: R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R1 - General Regional Economics > R11 - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes; R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R1 - General Regional Economics > R12 - Size and Spatial Distributions of Regional Economic Activity; R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R3 - Real Estate Markets, Spatial Production Analysis, and Firm Location > R31 - Housing Supply and Markets

References

Beeson, Patricia E. and Randall W. Eberts, 1989. “Identifying Productivity and Amenity Effects in Interurban Wage Differentials,” Review of Economics and Statistics 71(3), 443-452.

Berger, Mark C., Glenn C. Blomquist, and Klara Sabirianova Peter, 2008. “Compensating Differentials in Emerging Labor and Housing Markets: Estimates of Quality of Life in Russian Cities,” Journal of Urban Economics 63, 25–55.

Bian, Yang, 2013. “Essays on Housing Dynamics in China,” doctoral dissertation, Georgetown University.

Blomquist, Glenn, Mark Berger, and John Hoehn, 1988. “New Estimates of the Quality of Life in Urban Areas,” American Economic Review 78, 89-107.

Buettner, Thiess and Alexander Ebertz, 2009. “Quality of Life in the Regions: Results for German Counties,” Annals of Regional Science 43, 89–112.

Cao, J. Albert and Ramin Keivani, 2014. “The Limits and Potential of the Housing Market Enabling Paradigm: An Evaluation of China’s Housing Policies from 1998 to 2011,” Housing Studies 29(1), 44-68.

Chen, Jie, Feng Guo and Aiyong Zhu, 2011. “The Housing-led Growth Hypothesis Revisited: Evidence from the Chinese Provincial Panel Data,” Urban Studies 48(10), 2049-2067.

Clark, David E., William E. Herrin, Thomas A. Knapp and Nancy E. White, 2003. “Migration and Implicit Amenity Markets: Does Incomplete Compensation Matter?” Journal of Economic Geography 3(3), 289-307.

Davidsson, Michael and Dan S. Rickman, 2011. “U.S. Micropolitan Growth: A Spatial Equilibrium Growth Analysis,” The Review of Regional Studies 41, 179-203.

Gabriel, Stuart A., Joe P. Mattey and William L. Wascher, 2003. “Compensating Differentials and Evolution in the Quality-of-Life among U.S. states,” Regional Science and Urban Economics 33(5), 619-649.

Gabriel, Stuart A. and Stuart S. Rosenthal, 2004. “Quality of the Business Environment versus Quality of Life: Do Firms and Households Like the Same Cities?” Review of Economics and Statistics 86(1), 438-444.

Glaeser, Edward L., Gyourko, J., 2005. “Urban Decline and Durable Housing,” Journal of Political Economy 113 (2), 345–375.

Glaeser, Edward L., Joseph Gyourko, and Albert Saiz, 2008. “Housing Supply and Housing Bubbles,” Journal of Urban Economics, 64, 198–217.

Glaeser, Edward L., Joseph Gyourko, and Raven E. Saks, 2006. “Urban Growth and Housing Supply,” Journal of Economic Geography 6, 71-89.

Glaeser, Edward L. and Kristina Tobio, 2008. “The Rise of the Sunbelt,” Southern Economic Journal 74(3), 610-643.

Graves, Phillip E, 1979. “A Life Cycle Empirical Analysis of Migration and Climate, by Race,” Journal of Urban Economics 6(2), 135-47.

Gyourko, Joseph, Christopher Mayer, and Todd Sinai, 2013. "Superstar Cities," American Economic Journal: Economic Policy, 5(4): 167-99.

Hanink Dean M., Robert G. Cromley and Avraham Y. Ebenstein, 2012. “Spatial Variation in the Determinants of House Prices and Apartment Rents in China,” Journal of Real Estate Finance Economics 45, 347–363.

He, Canfei, Zhiji Huang and Rui Wang, 2014. “Land Use Change and Economic Growth in Urban China: A Structural Equation Analysis,” Urban Studies 51(13), 2880-2898.

Huang, Weiping, 2014. “Analyzing the Dynamical Factors of Housing Price in China,” Research in World Economy 5(1), 59-64.

Keng, C.W. Kenneth, 2006. “China’s Unbalanced Growth,” Journal of Contemporary China 15(46), 183-214.

Krupka, Douglas and Kwame Donaldson, 2013. “Wages, Rents and Heterogeneous Moving Costs,” Economic Inquiry 51(1), 844–864.

Lin, Jian, 2010. “Provincial Difference of Urbanization Level in Terms of Population Since 2000: Based on Emendation Statistical Data,” City Planning Review, 34(3), 48-56, last access on August 15, 2015 at http://wenku.baidu.com/view/1b26a7af50e2524de5187ea8.html.

Li G and Yi F, 2011. “Urbanisation of Capital or Capitalisation on Urban Land? Land Development and Local Public Finance in Urbanising China,” Urban Geography 32(1): 50–79.

Lockett, Hudson and Ryan Henderson, 2016. “Reverse Engineering China’s Dependably Stable Consumer Price Index,” China Economic Review, December 4.

Man, Joyce Yanyun, Siqi Zheng and Rongrong Ren, 2011. “Housing Policy and Housing Markets: Trends, Patterns, and Affordability,” in China’s Housing Reform and Outcomes, edited by Joyce Yanyun Man, Lincoln Institute of Land Policy, Cambridge, MA.

Marshall, Kathryn, 2011. “The Factor Content of Chinese Trade,” Journal of International Trade and Economic Development 20(6), 769-787.

Morrison, Nicola, 2014. “Building Talented Worker Housing in Shenzhen, China, to Sustain Place Competitiveness,” Urban Studies 51(8), 1539-1558.

Ottaviano, G. and Pinelli, D., 2006. “Market Potential and Productivity: Evidence from Finnish Regions,” Regional Science and Urban Economics 36, 636–657.

Partridge, Mark D., Dan S. Rickman, Kamar Ali and M. Rose Olfert, 2010. “Recent Spatial Growth Dynamics in Wages and Housing Costs: Proximity to Urban Production Externalities and Consumer Amenities,” Regional Science and Urban Economics 40, 440-452.

Quigley, John M., 2008. “Urbanization, Agglomeration and Economic Development”, in: Michael Spence, Patricia C. Annez and Robert M. Buckley (Eds) Urbanization and Growth, pp. 115–132. Washington, DC: World Bank Press.

Rickman, Dan S., 2014. “Assessing Regional Quality of Life: A Call for Action in Regional Science,” The Review of Regional Studies 44(1), 1-12.

Rickman, Dan S. and Mouhcine Guettabi, 2015, "The Great Recession and Nonmetropolitan America", Journal of Regional Science, 55 (1), 93-112.

Rickman, Dan S. and Shane D. Rickman, 2011. “Population Growth in High? Amenity Nonmetropolitan: What’s the Prognosis?” Journal of Regional Science 51(5), 863-879.

Rickman, Dan S. and Hongbo Wang, 2015. "U.S. Regional Population Growth 2000- 2010: Natural Amenities or Urban Agglomeration?" Papers in Regional Science. DOI: 10.1111/pirs.12177.

Roback, Jennifer, 1982. “Wages, Rents, and the Quality of Life,” Journal of Political Economy 90, 1257-1278.

Rosen, Sherwin, 1979. “Wage-based Indexes of Urban Quality of Life,” In Current Issues in Urban Economics, edited by Peter Mieszkowski and Mahlon Straszheim. Baltimore: Johns Hopkins University Press, pp. 74-104.

Stratford, Kate and Arianna Cowling, “Chinese Household Income, Consumption and Savings,” RBA Bulletin, (September), 31-40.

Tabuchi, Takatoshi and Thisse, Jacques F., 2006. “Regional Specialization, Urban Hierarchy, and Commuting Costs,” International Economic Review 47, 1295–1317.

Wang, Ya Ping and Alan Murie, 2000. “Social and Spatial Implications of Housing Reform in China,” International Journal of Urban and Regional Research 24(2), 397-417.

Wang, Zhi and Qinghua Zhang, 2014. “Fundamental Factors in the Housing Markets of China,” Journal of Housing Economics 25, 53-61.

Wu, Fulong, 2015. “Commodification and Housing Market Cycles in Chinese Cities,” International Journal of Housing Policy 15(1), 6-26.

Xu, Jiang, Anthony Yeh and Fulong Wu, 2009. “Land Commodification: New Land Development and Politics in China since the Late 1990s,” International Journal of Urban and Regional Research 33(4), 890-913.

Ye, Jian-Ping, Jia-Ning Song and Chen-Guang Tian, 2010. “An Analysis of Housing Policy during Economic Transition in China,” International Journal of Housing Policy 10(3), 273-300.

Yu, Huayi, 2011. “Size and Characteristic of Housing Bubbles in China’s Major Cities: 1999–2010,” China and World Economy 19(6), 56-75.

Zheng, Siqi Q., Jing Cao, Matthew E. Kahn and Cong Sun, 2014a. “Real Estate Valuation and Cross-Boundary Air Pollution Externalities: Evidence from Chinese Cities,” The Journal of Real Estate Finance and Economics 48(3), 398-414.

Zheng, Siqi, Sun, Cong, Qi, Ye and Matthew E. Kahn, 2014b. “The Evolving Geography of China's Industrial Production: Implications for Pollution Dynamics and Urban Quality of Life,” Journal of Economic Surveys 28(4), pp. 709-24.