The impact of cultural factors on Chinese housing prices
Sharply rising housing prices have long a heated topic in China and much research has been done to explain the phenomenon. Different from many papers that focus on fundamental factors, this paper discusses the impact of cultural factors. In particular, I analyze the influence on housing prices of the gender ratio and Hukou restrictions. First, as Hukou restrictions introduce an artificial barrier to regional mobility and constraint individuals in migrating to rapidly growing urban areas, I expect they will lead to higher housing prices. Second, due to the fact that husbands have to provide housing for their prospective wives, I hypothesize that imbalances in the gender ratio will additionally fuel demand for housing and thus lead to higher housing prices. Using Chinese census data from 1993 to 2013, covering 31 provincial level divisions that China currently administers, my findings indicate that, except for fundamental factors, there is a significant and positive relationship between Hukou restrictions and housing prices, and a significant and negative relationship between the gender ratio and housing prices. These results are robust to different model specifications underlining the importance of cultural factors driving housing prices in China. To address this issue, government policy could promote decentralization, remove family size restrictions, and provide residents with more investment options.
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