A Reexamination of Housing Price and Household Consumption in China: The Dual Role of Housing Consumption and Housing Investment

Zan Yang, Ying Fan, Liqing Zhao

Research output: Journal article publicationJournal articleAcademic researchpeer-review

15 Citations (Scopus)


It is important to investigate the correlation between housing price and household consumption to gain an understanding of the behavior of the economy and effectively handle the consequences of economic development. In the last two decades, the accumulation of housing wealth by Chinese households has not been effectively transmitted to their final consumption. We discovered that the sustained increase in household wealth and housing-ownership rate in China has been accompanied by a decrease in consumption rate. We also identified a negative correlation between housing price and household consumption for both the homeowners who own one housing unit and those who own two units of housing. We investigated this phenomenon in China both theoretically and empirically by capturing the dual nature of housing as a consumption good and an investment vehicle. We found that the demand for second housing units is motivated by increasing housing consumption demand rather than pure investment needs. To explain the mechanisms that drive household-consumption behavior, we also explored the effects on household consumption of China’s educational system, marriage market and ageing society, as well as future housing-market uncertainty. The implications of government intervention in the housing market are discussed.

Original languageEnglish
Pages (from-to)472-499
Number of pages28
JournalJournal of Real Estate Finance and Economics
Issue number3
Publication statusPublished - 1 Apr 2018


  • China
  • Consumption demand
  • Household consumption
  • Housing price
  • Investment demand

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics
  • Urban Studies

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