House price and household consumption in China: evidence from micro-level data

Purpose: This paper aims to identify how house price affects household consumption. Design/methodology/approach: The authors use a micro-level data set that tracks the house price and consumption of a vast number of households over a period of four years. OLS regression is the main econometric method. Findings: The authors document robust evidence that an increase in house prices stimulates household consumption, regardless of whether a household owns or rents. Moreover, the authors find that both acquiring and losing homeownership negatively affects household consumption. Further investigation suggests significant regional heterogeneity in the relationship between house prices and household consumption. Originality/value: This is one of the first studies examining the relationship between house price and household consumption in China using micro-level data. Given the uniqueness of the Chinese housing market and China’s fast-growing consumption rate, the study contributes new evidence to the long-lasting debate.