The Effect Of Housing Price Fluctuation On Household Consumption In Urban China

The consumption rate of residents,over the past three decades,has been relatively low.Increasing the consumption and optimizing consumption structure have always been the top priority of China's economic development and reform.Real estate is an important asset for families and the most important component of household wealth.Scholars and economists-have always believed that the fluctuation of housing prices is a major factor affecting consumption.Housing and consumption,the two hot topics that the academic community has been paying attention to,are also the people's livelihood issues which concern the immediate interests of each individual.Therefore,under the background of the profound economic transformation that China faces,it is very necessary for us to study how housing price fluctuations affect residents' consumption and the influence mechanism behind them,which is conducive to the formulation of housing system reform and long-term mechanism in the next step.Certain critical experience and policy implications,the introduction of supporting policy portfolio promot:ing consumption and healthy development of real estate market,emerge from our study.This paper uses CFPS over the period of 2010 to 2014 to construct unbalanced panel data,and makes use of the provincial codes to link household consumption and income data with real estate markets and economic conditions of relevant provinces.At the same time,we attempt to make analysis on the impact of the change in housing prices on urban residents' consumption in China and the impact mechanism behind it.The empirical analysis demonstrates that:(1)From the perspective of total consumption,rising housing prices boosts urban residents' consumption.Housing prices have risen by 10%,while consumer spending has increased by 4.2%on average.As for the consumption structure,the elasticity coefficient of survival consumption to the change of house price is greater than that of development consumption.At the same time,the rise of housing prices will inhibit consunption upgrading.With per 10%increase of housing prices,the proportion of development consumption will decline by 97 percentage points.Given other variables unchanged,the adverse effect will gradually weaken along with the increase of income.(2)The form of real estate ownership has a distinct impact on housing price fluctuations affecting household consumption.The increase in housing prices has the largest positive impact on renters,indemnificatory housing families followed,the smallest of homeowners.Among them,the homeovwners,in the environment of rising housing prices,may still have the motivation of 'reducing consumption in order to buying houses in the foture,.'Liquidity constraints effect' of rental households did not work.Homeowners with multiple properties promote their spending through bigger 'wealth effect'.At the same time,they are more willing to sell their home and get a substantial capital gain when home prices rise relative to receiving rental.(3)There is a heterogeneous effect between house price fluctuations and consumption.Specifically,the changes of housing prices have the greatest impact on families with medium level of consumption,and for other cohort,there is no significant influences.