Yongzhou Hou

In this study, we examine the dynamics of housing prices across 35 Chinese cities from 2010 to 2024 using an error correction model (ECM). Using two-stage least squares (TSLS), we address endogeneity in housing stock. The results show a stable long-run relation between housing prices, income, user cost, and employment. The findings indicate that user cost exerts a significant negative pressure on housing valuations. While housing stock exhibits a positive, long-run correlation with prices due to rapid urbanization, its expansion effectively dampens price growth in the short term. We also find differences across market segments. The newly built housing market returns to equilibrium in about 33 months, while the second-hand market requires about 60 months. These results underscore the necessity of considering segment-specific adjustment speeds and fundamental drivers when formulating urban housing policies in China.

Beijing’s real estate market, a key part of China’s economy, plays a crucial role in the nation’s development. Any downturn or collapse in housing prices in the city would have severe consequences for both the real estate sector and the broader economy. This paper aims to explore whether a housing price bubble existed in Beijing from 2014 to 2024. This study investigates the areas where these price bubbles are mainly concentrated, analyzing various indicators, such as the house price-to-income ratio, house price-to-rent ratio, and control charts. This study employs the rational expectations model to measure potential price bubbles, integrating these indicators to assess housing price volatility. The findings indicate clear signs of a housing price bubble in 2016 and 2017. From the perspective of Beijing’s districts, Huairou, Pinggu, and Miyun exhibited clear signs of housing price bubbles, while Changping, Shunyi, and Chaoyang displayed comparatively minimal housing price bubbles. This study utilizes nearly a decade of fresh district-level data to study housing price bubbles in Beijing, which contributes to the exploration of the risks associated with Beijing’s real estate market.