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Household Savings and Housing Prices in China

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  • Junmin Wan

Abstract

type="main" xml:id="twec12250-abs-0001"> Using Phillips et al. (2012, ‘Testing for Multiple Bubbles’, Yale University) bubble test and the ratio of monthly housing price to rent in China, we cannot find that there were bubbles in the housing market for all provinces including urban and rural sectors during January 2000 to August 2011, but we found that there were housing bubbles for the 36 major cities during December 2004 to July 2011. By the panel provincial data during 1995–2010 in China, we found that the bubbly housing price, especially in the urban sector, significantly raises the household saving rate in cities as well as nationwide after controlling for the life cycle and the other related factors. Based on the micro household data for six major cities in China in 2005, we also find that the increase in housing price and housing loans has significantly positive impacts on household saving, even after controlling for other possible factors. The empirical results here are consistent with the predictions of the speculative saving hypothesis.

Suggested Citation

  • Junmin Wan, 2015. "Household Savings and Housing Prices in China," The World Economy, Wiley Blackwell, vol. 38(1), pages 172-192, January.
    • Handle: RePEc:bla:worlde:v:38:y:2015:i:1:p:172-192
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    File URL: http://hdl.handle.net/10.1111/twec.2015.38.issue-1
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    Cited by:

    1. Michael Dotsey & Wenli Li & Fang Yang, 2019. "Demographic Aging, Industrial Policy, and Chinese Economic Growth," Working Papers 19-21, Federal Reserve Bank of Philadelphia.
    2. Chen, Qihui & Deng, Tinghe & Bai, Junfei & He, Xiurong, 2017. "Understanding the retirement-consumption puzzle through the lens of food consumption-fuzzy regression-discontinuity evidence from urban China," Food Policy, Elsevier, vol. 73(C), pages 45-61.
    3. Shihong Zeng & Xinwei Zhang & Xiaowei Wang & Guowang Zeng, 2019. "Population Aging, Household Savings and Asset Prices: A Study Based on Urban Commercial Housing Prices," Sustainability, MDPI, vol. 11(11), pages 1-21, June.
    4. Ya Gao & Xiuting Li & Jichang Dong, 2019. "Does Housing Policy Sustainability Matter? Evidence from China," Sustainability, MDPI, vol. 11(17), pages 1-17, August.
    5. Horag Choi & Steven Lugauer & Nelson C. Mark, 2017. "Precautionary Saving of Chinese and U.S. Households," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 49(4), pages 635-661, June.
    6. Filiz Mızrak & Serhat Yüksel, 2019. "Significant Determiners of Greek Debt Crisis: A Comparative Analysis with Probit and MARS Approaches," International Journal of Finance & Banking Studies, Center for the Strategic Studies in Business and Finance, vol. 8(3), pages 33-50, July.
    7. Wan, Junmin, 2018. "Non-performing loans and housing prices in China," International Review of Economics & Finance, Elsevier, vol. 57(C), pages 26-42.
    8. Wan, Junmin, 2024. "Transmission of housing bubbles among industrial sectors," International Review of Economics & Finance, Elsevier, vol. 89(PA), pages 692-701.
    9. Yuekai Cheng & Hongyi Li & Qi Sun & Yu Wang, 2019. "A Model of Household Savings and Alternative Investments in Rural China," Asian Economic Papers, MIT Press, vol. 18(2), pages 145-162, Summer.
    10. Michael Dotsey & Wenli Li & Fang Yang, 2022. "Demographic Transition, Industrial Policies and Chinese Economic Growth," Working Papers 2210, Federal Reserve Bank of Dallas, revised 08 Feb 2024.
    11. Michael Dotsey, 2019. "Demographic Aging, Industrial Policy, and Chinese Economic Growth," 2019 Meeting Papers 640, Society for Economic Dynamics.
    12. Virtanen, Timo & Tölö, Eero & Virén, Matti & Taipalus, Katja, 2018. "Can bubble theory foresee banking crises?," Journal of Financial Stability, Elsevier, vol. 36(C), pages 66-81.
    13. Wan, Junmin & Qiu, Qiqi, 2023. "Industrial investments and housing prices in China," International Review of Economics & Finance, Elsevier, vol. 84(C), pages 832-852.
    14. Awaworyi Churchill, Sefa & Iqbal, Nasir & Nawaz, Saima & Yew, Siew Ling, 2024. "Unconditional cash transfers, health and savings," Economics & Human Biology, Elsevier, vol. 53(C).
    15. Rafiq Ahmed & Syed Tehseen Jawaid & Samina Khalil, 2021. "Bubble Detection in Housing Market: Evidence From a Developing Country," SAGE Open, , vol. 11(2), pages 21582440211, April.

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