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Are housing prices improving GDP or vice versa? A cross-regional study of China

Author

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  • Su Chi-Wei
  • Xiao-Cui Yin
  • Ran Tao
  • Haigang Zhou

Abstract

This study applies the bootstrap panel Granger causality test to examine the relationship between housing prices (HPs) and GDP across provinces in China. Empirical results show that HPs Granger cause GDP in the eastern region and in most provinces of the central region. Rapid industrialization and urbanization in the eastern region and the low-cost advantages of the central region promote housing investment and significantly affect GDP. However, GDP has no influence on HPs in the eastern region due to insufficient land supply, housing speculation and HPs deviating from the economic fundamentals. HPs do not Granger cause GDP in the western region because it is less attractive for housing investment. Also, GDP Granger causes HPs in the central and western regions that the economy can influence HPs. These findings could help the government formulate reasonable regional policies for the development of the housing market and economic growth.

Suggested Citation

  • Su Chi-Wei & Xiao-Cui Yin & Ran Tao & Haigang Zhou, 2018. "Are housing prices improving GDP or vice versa? A cross-regional study of China," Applied Economics, Taylor & Francis Journals, vol. 50(29), pages 3171-3184, June.
    • Handle: RePEc:taf:applec:v:50:y:2018:i:29:p:3171-3184
    DOI: 10.1080/00036846.2017.1418078
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    Cited by:

    1. Kai Li & Zhili Ma & Guozhou Zhang, 2019. "Evaluation of the Supply-Side Efficiency of China’s Real Estate Market: A Data Envelopment Analysis," Sustainability, MDPI, vol. 11(1), pages 1-18, January.
    2. Vincenzo Del Giudice & Francesca Salvo & Pierfrancesco De Paola, 2018. "Resampling Techniques for Real Estate Appraisals: Testing the Bootstrap Approach," Sustainability, MDPI, vol. 10(9), pages 1-16, August.
    3. Xue Han & Changchun Feng, 2024. "Effects of Affordable Housing Land Supply on Housing Prices: Evidence from 284 Cities in China," Land, MDPI, vol. 13(5), pages 1-17, April.
    4. Yin, Xiao-Cui & Li, Xin & Wang, Min-Hui & Qin, Meng & Shao, Xue-Feng, 2021. "Do economic policy uncertainty and its components predict China's housing returns?," Pacific-Basin Finance Journal, Elsevier, vol. 68(C).
    5. Benjamin Kwakye & Chan Tze Haw, 2020. "Interplay of the Macroeconomy and Real Estate: Systematic Review of Literature," International Journal of Economics and Financial Issues, Econjournals, vol. 10(5), pages 262-271.
    6. Li, Yaoyao & Qi, Yuan & Liu, Licheng & Hou, Yuchen & Fu, Shuya & Yao, Jingtao & Zhu, Daolin, 2022. "Effect of increasing the rental housing supply on house prices: Evidence from China’s large and medium-sized cities," Land Use Policy, Elsevier, vol. 123(C).

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