The Impact Of China's Housing Restriction Policy On Housing Prices

Since China's urban housing system reform in 1998,with the housing distribution system canceling and mortgage policy implementation,the real estate industry has entered into a rapid development period.After American financial crisis in 2008,China pushed out Four Thousand Billion Plan to stimulate the economy,resulting in a large amount of social capital flocking to the real estate market and high housing prices.House prices is much higher than the acceptable level of ordinary residents,especially in the first-tier cities such as Beijing,Shanghai,Guangzhou and Shenzhen,which seriously affects the improvement of people's living quality and living standards.In order to curb the investment demand and speculative demand in the real estate market,the Chinese government has issued a series of real estate control policies related to the housing restriction policy since April 2010.Since then,the housing restriction policy has been fully rolled out,and 46 cities participated in the first round of the housing restriction policy.In 2014,the local economy faced downward pressure and the real estate market went cold,so the focus of the real estate control policies was changed from “housing prices control” to “steady growth + destocking”.Starting from July 2014,except first-tier cities and Sanya,other cities have gradually withdrawn from the army of the housing restriction policy.After the release of the “930 New Policy” at the end of September 2014,the “3.30 New Policy”,the “831 Policy” and the new “930 Policy” in 2015,China's real estate market began to pick up gradually.However,the real estate market began to rebound strongly at the beginning of 2016.As a result,many major cities have re-launched the housing restriction policy since September 2016,with greater intensity.In this context,this paper combs three theoretical foundations of the housing restriction policy,namely market failure theory,supply and demand theory and fourquadrant model,aiming to qualitatively analyze the impact of the housing restriction policy on housing prices.Then this paper introduces the development of the real estate market since 1998 and reviewed three stages of “implementationcancellation-restart” of the housing restriction policy.Based on the existing literature,this paper selects the monthly panel data of new residential prices and second-hand residential prices during the first round of the housing restriction policy in 70 large and medium-sized cities,and uses the DID method to empirically study the impact of the housing restriction policy on the real estate prices to investigate the role of the housing restriction policy in controlling the excessive rise in housing prices.After determining that the model satisfies the parallel trend hypothesis,this paper first uses Differences-in-Differences to analyze the overall impact of the housing restriction policy on the new residential prices and second-hand residential prices,and then conducts several robust tests.On this basis,the paper further analyzes the impact of different means of the housing restriction policy,the regional differences of the housing restriction policy and the timeliness of the housing restriction policy.The empirical research draws the following conclusions:(1)The housing restriction policy can reduce new residential prices and second-hand residential prices by 1.165% and 1.819% respectively.This is a relatively mild but not negligible impact compared with the growth rate of the average housing prices of 7.32% from 1998 to 2017.The housing restriction policy can alleviate the pressure of the excessively rapid rise of housing prices.(2)Requiring non-local households to have a “tax or social security payment certificate”,and expanding the restriction area and other more powerful means of the housing restriction policy can effectively enhance the impact of the housing restriction policy.(3)There are regional differences in the impact of the housing restriction policy: the housing restriction policy fails to effectively control the rise of housing prices in first-tier cities,and instead increases the new residential prices and second-hand residential prices by 1.350% and 1.790%.For second-tier cities,the housing restriction policy can reduce new residential prices and second-hand residential prices by 1.118% and 1.844%.For third-tier cities,the housing restriction policy can reduce new residential prices and second-hand residential prices by 3.450% and 4.521%.So the impact of the housing restriction policy in third-tier cities is greater than that in second-tier cities.(4)The impact of the housing restriction policy has a time lag,and it begins to significantly curb the rise of housing prices three months after the implementation of the housing restriction policy.Regardless of the long-term or short-term,the housing restriction policy can effectively curb the rise of house prices.However,the housing restriction policy is more effective in the short term,and its inhibitory effect on housing prices is becoming weaker over time.According to the empirical conclusions,some suggestions are offered as followed: implement a differentiated housing restriction policy,direct various resources to the third-and fourth-tier cities and construct a long-term mechanism for the healthy development of the real estate market.