IDEAS home Printed from https://ideas.repec.org/a/sae/sagope/v11y2021i2p21582440211015709.html
   My bibliography  Save this article

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

Author

Listed:
  • 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
    as

    Download full text from publisher

    File URL: https://journals.sagepub.com/doi/10.1177/21582440211015709
    Download Restriction: no
    File URL: https://libkey.io/10.1177/21582440211015709?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Saiz, Albert, 2007. "Immigration and housing rents in American cities," Journal of Urban Economics, Elsevier, vol. 61(2), pages 345-371, March.
    2. Salim, Ruhul & Yao, Yao & Chen, George S., 2017. "Does human capital matter for energy consumption in China?," Energy Economics, Elsevier, vol. 67(C), pages 49-59.
    3. Hafedh Bouakez & Nooman Rebei, 2007. "Why does private consumption rise after a government spending shock?," Canadian Journal of Economics, Canadian Economics Association, vol. 40(3), pages 954-979, August.
    4. Meese Richard & Wallace Nancy, 1994. "Testing the Present Value Relation for Housing Prices: Should I Leave My House in San Francisco?," Journal of Urban Economics, Elsevier, vol. 35(3), pages 245-266, May.
    5. Orazio P. Attanasio & Laura Blow & Robert Hamilton & Andrew Leicester, 2009. "Booms and Busts: Consumption, House Prices and Expectations," Economica, London School of Economics and Political Science, vol. 76(301), pages 20-50, February.
    6. Cheung, Yan-leung & Tsang, Shu-ki & Mak, Sui-choi, 1995. "The Causal Relationships between Residential Property Prices and Rentals in Hong Kong: 1982-1991," The Journal of Real Estate Finance and Economics, Springer, vol. 10(1), pages 23-35, January.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. He, Congxian & Zhou, Can & Wen, Huwei, 2024. "Improving the consumer welfare of rural residents through public support policies: A study on old revolutionary areas in China," Socio-Economic Planning Sciences, Elsevier, vol. 91(C).
    2. Kong Yu & Sun Guo, 2023. "The Impact of Housing Rental Market Development on Household Consumption and Its Mechanism: Evidence from 69 Large- and Medium-Sized Cities in China," Land, MDPI, vol. 12(7), pages 1-13, July.
    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.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. 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.
    2. Todd Sinai & Nicholas Souleles, 2013. "Can Owning a Home Hedge the Risk of Moving?," American Economic Journal: Economic Policy, American Economic Association, vol. 5(2), pages 282-312, May.
    3. John Muellbauer, 2012. "When is a Housing Market Overheated Enough to Threaten Stability?," RBA Annual Conference Volume (Discontinued), in: Alexandra Heath & Frank Packer & Callan Windsor (ed.),Property Markets and Financial Stability, Reserve Bank of Australia.
    4. Eddie Chi-man Hui & Xian Zheng, 2012. "The dynamic correlation and volatility of real estate price and rental: an application of MSV model," Applied Economics, Taylor & Francis Journals, vol. 44(23), pages 2985-2995, August.
    5. Michael F. Lovenheim & Kevin J. Mumford, 2010. "Do Family Wealth Shocks Affect Fertility Choices? Evidence from the Housing Market Boom and Bust," Purdue University Economics Working Papers 1228, Purdue University, Department of Economics.
    6. Jean Gabszewicz & Ornella Tarola & Skerdilajda Zanaj, 2016. "Migration, wages and income taxes," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 23(3), pages 434-453, June.
    7. Savignac, Frédérique & Arrondel, Luc & Lamarche, Pierre, 2015. "Wealth effects on consumption across the wealth distribution: empirical evidence," Working Paper Series 1817, European Central Bank.
    8. Milo Bianchi & Paolo Buonanno & Paolo Pinotti, 2012. "Do Immigrants Cause Crime?," Journal of the European Economic Association, European Economic Association, vol. 10(6), pages 1318-1347, December.
    9. David C. Maré & Steven Stillman, 2010. "The Impact of Immigration on the Geographic Mobility of New Zealanders," The Economic Record, The Economic Society of Australia, vol. 86(273), pages 247-259, June.
    10. Janine Aron & John Muellbauer, 2006. "Housing Wealth, Credit Conditions and Consumption," CSAE Working Paper Series 2006-08, Centre for the Study of African Economies, University of Oxford.
    11. Üngör, Murat, 2014. "Some thought experiments on the changes in labor supply in Turkey," Economic Modelling, Elsevier, vol. 39(C), pages 265-272.
    12. Hjalmarsson, Erik & Hjalmarsson, Randi, 2006. "Efficiency In Housing Markets: Do Home Buyers Know How To Discount?," Working Papers in Economics 232, University of Gothenburg, Department of Economics.
    13. Kanis Saengchote & Voraprapa Nakavachara & Yishuang Xu, 2023. "Capitalising the Network Externalities of New Land Supply in the Metaverse," Papers 2303.17180, arXiv.org.
    14. Pia M. Orrenius & Madeline Zavodny, 2015. "Does Immigration Affect Whether US Natives Major in Science and Engineering?," Journal of Labor Economics, University of Chicago Press, vol. 33(S1), pages 79-108.
    15. L. Marattin & S. Salotti, 2009. "The Response of Private Consumption to Different Public Spending Categories: VAR Evidence from UK," Working Papers 670, Dipartimento Scienze Economiche, Universita' di Bologna.
    16. Xiaoqin Sun & Yuhai Su & Honglei Liu & Chengyou Li, 2022. "The Impact of House Price on Urban Household Consumption: Micro Evidence from China," Sustainability, MDPI, vol. 14(19), pages 1-20, October.
    17. Xin DONG & Weihua ZHOU, 2016. "Housing Affordability and Permanent Migration Intention of Rural-Urban Migrants," Chinese Journal of Urban and Environmental Studies (CJUES), World Scientific Publishing Co. Pte. Ltd., vol. 4(02), pages 1-12, June.
    18. Evren Ceritoglu, 2017. "The effect of house price changes on cohort consumption in Turkey," Central Bank Review, Research and Monetary Policy Department, Central Bank of the Republic of Turkey, vol. 17(3), pages 1-99–110.
    19. Mangum, Kyle & Molloy, Raven, 2021. "Migration and Housing special issue: Introduction from Editors Kyle Mangum and Raven Molloy," Journal of Housing Economics, Elsevier, vol. 53(C).
    20. Todd Sinai, 2012. "House Price Moments in Boom-Bust Cycles," NBER Chapters, in: Housing and the Financial Crisis, pages 19-68, National Bureau of Economic Research, Inc.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sae:sagope:v:11:y:2021:i:2:p:21582440211015709. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: SAGE Publications (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.