House Price And Consumption Structure Of Urban Residents

Does the rapid rise in real estate prices lead to"consumption upgrading"or"consumption downgrading"for domestic urban residents,which has become a focus issue widely discussed in the society and academia.On the one hand,the rise in real estate prices has caused the residents who have already invested in real estate to increase high-end consumption through the wealth effect.On the other hand,the crowding out effect of real estate investment on consumption and the pressure on house purchase caused by high housing prices may reduce the level of residents'consumption.Based on the micro-level credit card data and taking the policies for regulating the China's real estate market as exogenous shock,this research analyzed the impact of real estate prices on the consumption structure through difference-in-difference model.The empirical results show that consumption upgrading and consumption downgrading coexist during the purchase restricted period,but consumption structure is optimized on the whole.Specifically,the residents have reduced high-end spending in survival consumption,while the high-end consumption in development and enjoyment consumption have increased significantly.In the form of consumption downgrading,the mid-range and high-grade consumption in catering including food,tobacco and alcohol is significantly decreased,while the consumers spent more on the low-end consumption.Also whole expenditure on household goods and services declined with the reduction in both mid-range and high-end consumption.The expenditure categories of consumption upgrading exhibit three different types.The specific performance of the consumption upgrade in health service is the significant increase in each level of consumption,that is,the accumulation of the amount on all levels.The second form is showed on the expenditure in education and entertainment,clothing and other goods and service.The consumption migrates to a higher level,from the mid-range to high-end consumption and from the low-end to the middle-grade consumption respectively,which means in the above three categories the spending on the upscale goods has risen significantly while the expenditures of middle-priced and low-end goods have dropped.The last form of the consumption upgrading is represented by expenditures on transportation and communication.The upward migration only occurs between low-grade and mid-range consumption,and the high-end consumption has no obvious change.The subsequent heterogeneity analysis suggests that the regulation policies could affect the balanced between supply and demand in rental market,which leads to the increase of rents.Therefore,the housing consumption of renters grows significantly,while the expenditure of owners on housing drops which resulting from the decreased consumption on goods complementary to housing due to the difficulties of purchasing a house during the restriction period.This result performs that consumer behavior related to housing expenditure is distinct from the behavior related to all the other categories.The changes in the consumption of all the other categories are caused by the potential income growth,which has similar effects on different consumer groups,while expenditures on housing result from the impact of regulation policies on real estate market.In addition,the analysis on the heterogeneous age groups draws the similar conclusion as the previous literature.The changes in house prices have less influence on the consumption of older consumers but the greater influence on the expenditure of the young.