The Impact of Urban Housing Purchase Restrictions on Real Estate Prices and Household Consumption: A Difference-in-Differences Approach

Abstract

This study investigates the impact of urban home purchase restriction policies implemented in China’s real estate market in recent years on housing prices and household consumption, employing a difference-in-differences (DID) methodology. The study expands the interdisciplinary intersection of economics and sociology, enriching the empirical literature on this topic. Furthermore, the findings are translated into practical applications to enhance residents’ quality of life through threefold value creation. The comprehensive empirical analysis yields the following conclusions: First, standalone home purchase restrictions failed to significantly reduce housing prices or consumer price levels in the short term within the treated cities. Second, a significant bidirectional positive correlation exists between housing prices and consumer prices. Overall, the interplay between the real estate market and the consumption market reveals notable inertia and lag in policy transmission effects. Consequently, policymakers must adopt more comprehensive policy combinations when regulating the real estate market and fully anticipate the lagging characteristics of policy impacts to achieve long-term stable development goals.