An Empirical Study of Housing Wealth and Consumption in China

Abstract

Using the most recent data from 2006 to 2018, I examine the relationship between housing wealth and residents' consumption with macro models and micro models. Splitting the sample into two periods, the macro data analysis suggests that the housing wealth effect is significantly positive in the period from 2006 to 2012 while it is not significant from 2013 to 2018. The micro evidence shows that the housing wealth effect on household consumption is generally positive, differing from regions, years, gender, education and other factors. The micro analysis results can explain part of the reason why housing wealth effect is weakening in China, but more evidence is needed to get a better understanding of this issue.