Can a house resale restriction policy curb speculation? Evidence from a quasi-natural experiment in China

Hao Lan, Fernando Moreira, Sheng Zhao*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

Abstract

Speculative opportunity is commonly defined as the chance for agents to resell an asset at a higher price. Few previous studies analyzed how speculation works in housing markets. In this paper we use a two-stage resale restriction policy implemented in China as an exogenous shock on the speculation chance in the second-hand housing market. We find that a sudden reduction in the future resale opportunity directly causes a significant decrease in house transaction prices and trading volumes. The findings may help regulators strategically intervene into the housing market by adjusting the resale rights of home buyers.
Original languageEnglish
Pages (from-to)841 - 859
JournalInternational Review of Economics and Finance
Volume83
Early online date4 Nov 2022
DOIs
Publication statusPublished - Jan 2023

Keywords

  • speculation
  • housing prices
  • resale restriction policy
  • quasi-natural experiment
  • Chinese real-estate market reform

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