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

Hao Lan; Fernando Moreira; Sheng Zhao

doi:10.1016/j.iref.2022.10.024

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 journal › Article › peer-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 language	English
Pages (from-to)	841 - 859
Journal	International Review of Economics and Finance
Volume	83
Early online date	4 Nov 2022
DOIs	https://doi.org/10.1016/j.iref.2022.10.024
Publication status	Published - Jan 2023

Keywords / Materials (for Non-textual outputs)

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

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

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. ",

keywords = "speculation, housing prices, resale restriction policy, quasi-natural experiment, Chinese real-estate market reform",

author = "Hao Lan and Fernando Moreira and Sheng Zhao",

note = "Funding Information: We want to thank the editors of International Review of Economics and Finance and three anonymous reviewers who provided suggestive and helpful comments for revising this paper. Also we would like to thank Li Yuanzhe who helped us with the data collection procedure in the initial phase. We are also grateful for the comments from session organizers and audience of Future Finance and Economics Association conference 2021. Publisher Copyright: {\textcopyright} 2022 Elsevier Inc.",

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doi = "10.1016/j.iref.2022.10.024",

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AU - Lan, Hao

AU - Moreira, Fernando

AU - Zhao, Sheng

N1 - Funding Information: We want to thank the editors of International Review of Economics and Finance and three anonymous reviewers who provided suggestive and helpful comments for revising this paper. Also we would like to thank Li Yuanzhe who helped us with the data collection procedure in the initial phase. We are also grateful for the comments from session organizers and audience of Future Finance and Economics Association conference 2021. Publisher Copyright: © 2022 Elsevier Inc.

PY - 2023/1

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N2 - 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.

AB - 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.

KW - speculation

KW - housing prices

KW - resale restriction policy

KW - quasi-natural experiment

KW - Chinese real-estate market reform

U2 - 10.1016/j.iref.2022.10.024

DO - 10.1016/j.iref.2022.10.024

M3 - Article

SN - 1059-0560

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EP - 859

JO - International Review of Economics and Finance

JF - International Review of Economics and Finance

ER -

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

Abstract

Keywords / Materials (for Non-textual outputs)

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