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Urban Leverage and Housing Price in China

Author

Listed:
  • Wanying Lu

    (Faculty of Construction and Environment, The Hong Kong Polytechnic University, Hong Kong, China)

  • Jianfu Shen

    (Department of Real Estate and Building, The Hong Kong Polytechnic University, Hong Kong, China)

Abstract

This paper examines whether urban leverage, defined by the bank loan-to-deposit ratio in a city, affects housing prices in China. Using a panel dataset of 236 cities and hedonic models, we find a depressing effect of urban leverage on housing price in first- and second-tier cities while leaving third- and fourth-tier cities unaffected. Urban leverage negatively affects housing prices by influencing credit supply. Moreover, the difference-in-differences analysis indicates that purchase restriction policies amplify the depressing effect of urban leverage on housing prices. Overall, we show that urban leverage is an important determinant of housing prices in China.

Suggested Citation

  • Wanying Lu & Jianfu Shen, 2022. "Urban Leverage and Housing Price in China," JRFM, MDPI, vol. 15(2), pages 1-12, February.
    • Handle: RePEc:gam:jjrfmx:v:15:y:2022:i:2:p:87-:d:752581
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    References listed on IDEAS

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    Cited by:

    1. Rita Yi Man Li, 2022. "Housing Real Estate Economics and Finance," JRFM, MDPI, vol. 15(3), pages 1-3, March.

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