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The Impact of Rising Housing Rent on Residents’ Consumption and Its Underlying Mechanism: Empirical Evidence from China

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  • Guangping Liu
  • Xiayuan Chang

Abstract

Based on 465 panel data from 31 provinces, autonomous regions, and municipalities in China from 2001 to 2015 (data come from “China Statistical Yearbook†), static and dynamic panel models were established by Stata16.0 software to analyze the impact of housing rent on household consumption. In order to explore the specific impact of rising housing rents on residents’ consumption, and then adjust housing policies to stimulate consumer demand, this article analyses three research topics: (a) the impact of rising housing rent on the overall consumption level of residents and whether there are regional differences; (b) the internal mechanism underlying the effect of rising housing rent on residents’ consumption; and (c) the different impacts of rising housing rent on different types of residents’ consumption by establishing fixed-effects and random-effects models. The results show that a rise in housing rent causes a wealth effect on residents’ consumption at the national level in all regions. The upgrading of the industrial structure plays a positive role in the relationship between the fluctuation in housing rent and residents’ consumption, that is, the more rational the industrial structure, the stronger the wealth effect of rising housing rent on residents’ consumption. The rise in housing rent positively affects residents’ daily necessities and services consumption; transportation and telecommunication consumption; education, culture, and entertainment consumption; and habitation consumption; while negatively affects food, tobacco, and alcohol consumption; clothing consumption; and other supplies and services consumption. However, the impact on health care consumption is not significant. Accordingly, the government should start by improving the housing rental market and reasonably promote the further development of the housing rental market, thereby further stimulating Chinese consumption level.

Suggested Citation

  • Guangping Liu & Xiayuan Chang, 2021. "The Impact of Rising Housing Rent on Residents’ Consumption and Its Underlying Mechanism: Empirical Evidence from China," SAGE Open, , vol. 11(2), pages 21582440211, May.
    • Handle: RePEc:sae:sagope:v:11:y:2021:i:2:p:21582440211015709
    DOI: 10.1177/21582440211015709
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    Cited by:

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    3. Zhou, Qiuyang, 2024. "Does the digital economy promote the consumption structure upgrading of urban residents? Evidence from Chinese cities," Structural Change and Economic Dynamics, Elsevier, vol. 69(C), pages 543-551.

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