Research On The Impact Of Housing Wealth On Behaviors Of Households

Since the reform and opening up,China’s total economic output has continued to increase,and its economic growth rate has leapt to the forefront of the world.Since the outbreak of the global financial crisis,China’s economic growth has entered a slow decline in recent years.In 2012,China’s GDP growth rate fell below 8% for the first time,and the domestic economy began to shift to the medium high-speed growth stage.Under the background that domestic economic development has shifted from a stage of high-speed growth to a stage of high-quality development,economic development is facing many uncertainties.In terms of investment,the problem of overcapacity in steel,coal and other industries and excessive real estate inventory in third-and fourth-tier cities are prominent.The investment structure needs to be continuously optimized.“Three Reductions,One Lowering and One Compensation” needs to be further promoted.In terms of exports,Sino-US trade frictions have intensified and exchange rate risks have increased.Exchange rate market reforms need to be further deepened to maintain the basic stability of the RMB exchange rate at a reasonable and balanced level.In terms of consumption,the fact of “high savings and low consumption” still exists,and the problem of insufficient domestic demand is still prominent.It is necessary to actively expand consumer demand and promote steady growth in consumption.In addition,other problems are also prominent: high prices,unbalanced supply and demand,and excessive leverage of real estate;small,medium and micro enterprises are difficult and expensive to raise funds,and the threshold for entrepreneurship is still high;financial markets are underdeveloped and residents’ investment channels are limited;labor supply continues to shrink,the aging of the population is intensifying,and the demographic dividend is gradually disappearing.The real estate industry is prone to accumulate systemic risks,which will affect the expansion of final consumption and the optimization and adjustment of economic structure,and ultimately affect the healthy development of the economy and society.As one of the important people’s livelihood issues,the housing issue is the key to improving the economic situation of “stop them being distracted from their intended purpose”.At present,most domestic researches study the impact of housing prices on household behaviors,and changes in housing wealth,as one of the micro-observations reflecting the housing market conditions,have not received sufficient attention and research on their impact on household behaviors.As an important part of household wealth,the impact of housing wealth on housheold behaviors needs to be deeply explored.At present,domestic researches on the effect of housing wealth on household behaviors are relatively limited to consumer decision-making,and researches on asset selection,entrepreneurial decision-making and labor supply are still scarce.In view of this,this paper uses the data from the China Household Finance Survey in 2015 and 2017 to study the impact of changes in housing wealth on the behavior of urban households in china and its mechanism.In terms of research content,this paper analyzes from the following five aspects.First,sort out the development process of the housing market and describe the characteristics of household housing wealth from different dimensions.Second,study the relationship between housing wealth and household savings rate.Third,study the relationship between housing wealth and household portfolio choices.Fourth,study the impact of housing wealth on household entrepreneurial behavior.Fifth,study the influence of housing wealth on household labor supply behavior.Based on the research of the above issues,this paper has the following findings:First,since the reform and opening up,China’s housing market reform has experienced four stages: housing marketization and commercialization reform,real estate marketization development,cyclical stimulus and regulation,and real estate long-term mechanism reform.The housing market has grown stronger and developed continuously.After China’s economy has entered a new normal,the government has introduced a large number of policies and measures to control housing prices from the dimensions of housing,credit,taxation,and land to promote the stable and healthy development of the real estate market.China’s real estate industry is changing with each passing day.The sales area of commercial housing is increasing year by year,and the amount of investment in commercial housing development is also increasing year by year.The living conditions of residents have been greatly improved.In2019,the per capita housing area of urban residents was 39.8 square meters,an increase of62.1% over 2002;the per capita housing area of rural residents was 48.9 square meters,an increase of 97.2% over 2000.Overall,China’s housing prices are showing a continuous upward trend,especially in first-tier(including new first-tier)cities.Based on the micro data of the China Household Finance Survey,the changes in household wealth brought about by the development of the housing market are measured at the household level,namely,the index of housing wealth,including housing appreciation,property value and home equity.Descriptive statistics show that the home ownership rate of urban households in China is very high.Most households own one house,and the proportion of households with three or more houses is on the rise.There are significant differences in the housing wealth of different groups,different city sizes,and different regions.There are also significant differences in the consumption,asset allocation,entrepreneurship,and labor supply of households at different quintiles of housing wealth.Second,housing wealth reduces the savings rate of urban households.Property value has a greater impact on the savings rate of first-and second-tier cities,low-income families and low-wealth families.Further analysis finds that property value has a significant impact on household savings rates in young and middle-aged families,but the effect is not significant in older families.No housing and renting families will increase the household savings rate.The number of houses has a significant negative impact on the urban household savings rate.Both the selling behavior and the selling value of houses will significantly reduce the urban household savings rate.The consumption attribute and investment attribute of the housing can significantly reduce the urban household savings rate.The mechanism analysis finds that property value reduces the household savings rate by alleviating the liquidity constraints faced by households and reducing the household’s precautionary savings incentives.Several tests have been conducted on the relationship between housing wealth and household savings rate in a variety of ways,and they all show that the main conclusion that housing wealth affects household savings rate is robust.Third,housing wealth increases the possibility and proportion of household investment in risky assets.The heterogeneity results show that the impact of housing wealth on household financial market participation is greater in first-and second-tier cities,eastern regions,and households whose heads are healthy,household heads have jobs and household heads with higher education.Further investigation shows that number of housing units,the attributes of the primary residence and other residence,housing sales all have significant impact on household investment portfolio management.Mechanism analysis shows that the increase in housing wealth has an impact on household asset allocation by increasing the demand for diversification and holding more types of risky financial assets.Robust estimation based on the instrumental variable method,excluding the sample of house purchases during the sample period,and the first-order difference estimation based on panel data all show that the impact of housing wealth on household financial market participation is significant.Fourth,housing wealth increases the possibility of household entrepreneurship.In addition,housing wealth has an important influence on the business activities of entrepreneurial households.Housing wealth has significantly expanded the scale of entrepreneurial households,improved the performance of entrepreneurial households,increased the amount of wage labor,and reduced the labor supply of family members on entrepreneurial projects.The effect of housing wealth on entrepreneurial decision-making is heterogeneous in different regions and different groups of people.The study finds that housing wealth has a more significant effect on promoting household entrepreneurship in the third,fourth,and fifth-tier cities and the central and western regions;housing wealth has a more significant impact on household entrepreneurs who have not received higher education and are healthy.Further analysis reveals that housing wealth plays different roles in different types of entrepreneurship.Housing wealth not only has a positive effect on promoting entrepreneurship,but also promotes active entrepreneurship,boss-type entrepreneurship and small and micro enterprise entrepreneurship.Housing wealth not only increases the willingness of families to start a business in the future,but also reduces the probability of family business failure.The mechanism test results show that the mechanism by which housing wealth affects entrepreneurship is mainly the credit effect and the wealth effect.Housing wealth serves as the initial capital for household entrepreneurship by improving the availability of industrial and commercial credit and alleviating the liquidity constraints faced by families,allowing families to cross the capital threshold required for entrepreneurship,thereby promoting household entrepreneurship.By replacing instrumental variables,first-order difference estimation,and using different definitions of explained variable,it is shown that the impact of housing wealth on household entrepreneurship is significant.Fifth,housing wealth reduces the labor supply of family members.The increase in housing wealth will reduce the probability of family members’ labor force participation and will also reduce the labor time of family members significantly.A sub-sample study finds that housing wealth not only reduces the labor supply of females,but also reduces the labor supply of males.Moreover,housing gain will also reduce the number of households working and the proportion of workers in the working-age workforce significantly.Heterogeneity analysis finds that housing gain has a greater impact on the labor force participation of family members in first-and second-tier cities and households with higher incomes,but housing gain has a smaller impact on the labor force participation rate of family members who have received higher education.Further analysis finds that housing gain has a more significant impact on the labor market for middle-aged individuals,especially those who are nearing retirement,and has no significant impact on the labor decisions of young individuals.The consumption function and investment function of the housing can significantly reduce the probability of labor force participation of family members,and the investment property of housing has a greater effect on labor force participation.The labor force participation of households without houses is not affected.By replacing instrumental variables,adopting different definitions of key explanatory variables and explained variables,and further limiting the sample,it is confirmed that the effect of housing wealth on the labor supply of family members is robust.