The Impact of Property-Purchasing Limitations Policy on Housing Price: Evidence from Xiamen and Shantou

Abstract

In 2010, the Chinese government published the property-purchasing limitations policy to restrain the rising housing prices. From May 1st, Beijing households are limited to purchasing only one property. They are required to complete a family member condition form to prevent fraud and buyers who tend to speculate on housing prices. The property-purchasing limitations policy is then carried out in 49 cities that are above the prefecture level. Since 2004, an increase in the living standards in tier 1 cities such as Beijing and Shanghai have attracted an abundance of people from other cities to relocate to tier 1 cities. Since then, housing prices have increased as the demand for properties has increased. This essay will discuss the effect of housing prices due to the existence of property-purchasing limitations policy in Xiamen and Shantou. According to the analysis, the existence of a property-purchasing limitations policy in the short run does not restrain the increasing housing price but does restrain the housing price in the long run. However, the effect could be more remarkable, leading to other reasons affecting housing prices, which could be discussed with possible reasons in the following essay. Overall, these results shed light on providing a more healthy and balanced real estate market.