Impact Of Home-purchase Restrictions On Growth Of Housing Prices In Different Chinese Cities

Since the beginning of the reform of real estate market in 1998,China's home prices rising all the way.In order to curb the excessive growth of home prices,government introduced a series of measures to control it.In these control measures,the home-purchase restrictions are most stringent.These policies have been executed in 46 cities starting in 2010,but most cities canceled the home-purchase restrictions in 2014.As home prices continue to rise,part of the cities restarted these policies in 2016.Whether the home-purchase restrictions are effective in reducing home prices,the impact of home prices after the cancellation of home-purchase restrictions,and how it affects different cities.These questions have been a hot topic for everyone to discuss.This paper makes an empirical analysis using monthly urban panel data from July 2005 to March 2017.Unlike the existing literature,we considered the effect of the policy execution and cancellation at the same time,and also made a grouping evaluation for different type of cities.We assume that the growth rate of urban house prices is determined by some common factors which cannot be observed,then we using the city home prices which don't execute home-purchase restrictions to extract the common factors.By comparing the real estate price index and the counterfactual estate price index,we found that the home-purchase restrictions reduced the three-tier city real estate price index by 0.494 percentages,raising the first tier city real estate price index 4,636 percentages,second tier city real estate price index 1.894 percentages at the whole time.Home-purchase restrictions played a certain role on curb home price growth faster at the beginning of implementation,but after cancel the policies,which pushed up the home prices of a first-tier and second-tier cites.Further analysis showed that during the home-purchase restrictions period,these policies have a good effect for the cities which are better in economic foundation,and have a negative effect for the cities which are good in living environment.These policies cannot get a good effect if the cities have a large population size or the pupils in the school growth faster.Therefore,when we conduct a policy,we ought to be based on the city's economic characteristics and development stage,only in this way,we can achieve our goals which are to stablilize the economic growth and to meet people's demand for a good living.