Housing market sentiment and homeownership
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Housing market sentiment and homeownership Zhaoyingzi Dong1 · Eddie C. M. Hui2 · Daichun Yi3 Received: 9 October 2018 / Accepted: 25 September 2020 © Springer Nature B.V. 2020
Abstract The homeownership in China has witnessed a sharp growth during the last two decades even though the increasing housing price has brought challenges to housing affordability. This study provides a new explanation for this phenomenon. Based on the China Households Finance Surveys (CHFS), we try to explore how housing market sentiment influences households’ actual housing-purchasing decision and potential house-purchasing intention. Our results show that housing price and housing market sentiment play quite different roles in households’ housing-related decisions. Higher housing price lowers the probability to make actual house purchase and discourage households’ home-purchase intention. Higher sentiment is positively related to the decision of purchasing a house, especially the second house. Households’ house-purchasing intention can be stimulated by higher sentiment. The higher the sentiment, the more investment will be made in housing market. From an academic perspective, this study contributes to the existing literature by considering the importance of market collective attitudes, i.e. “market sentiment”. From a practical perspective, our findings are expected to facilitate a better-informed decision-making process for homebuyers, property developers and policy makers. Keywords Housing price · Housing market sentiment · Home ownership · Housepurchasing intention · Housing demand
* Eddie C. M. Hui [email protected] Zhaoyingzi Dong [email protected] Daichun Yi [email protected] 1
School of Public Affairs, Zhejiang University, Zhejiang, China
2
Department of Building and Real Estate, The Hong Kong Polytechnic University, Hong Kong, China
3
Research Institute of Economics and Management, Southwestern University of Finance and Economics, Chengdu, China
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Z. Dong et al.
1 Introduction During the last two decades, the Chinese urban housing market has experienced a rapid development. The rocketing housing price has brought about challenges to housing affordability. However, homeownership’s rate has risen from 72% in 2000 according to the 2000 Population Census1 to over 90% in 2017 according to the China Household Finance Survey (CHFS). Houses no longer serve as shelters for home solely, and more importantly, houses are regarded as one kind of safe assets with higher returns for many Chinese households. Scholars have tried to account for the rising homeownership in China from various aspects, including the traditional ideas, urbanization, housing reforms, the Hukou system, credit access and so on (Huang and Clark 2002; Xu 2017; Cui et al. 2016). However, these are not enough to explain the boom of second homeownership. Previous literature on the second home in the West proposes that the second home is driven form leisure demand (Tress 2002), and the rising mobility, emotional attachment (Hui
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