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Housing market sentiment and homeownership

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Abstract

The homeownership in China has witnessed a sharp growth during the last two decades even though the increasing housing price has brought challenges to housing affordability. This study provides a new explanation for this phenomenon. Based on the China Households Finance Surveys (CHFS), we try to explore how housing market sentiment influences households’ actual housing-purchasing decision and potential house-purchasing intention. Our results show that housing price and housing market sentiment play quite different roles in households’ housing-related decisions. Higher housing price lowers the probability to make actual house purchase and discourage households’ home-purchase intention. Higher sentiment is positively related to the decision of purchasing a house, especially the second house. Households’ house-purchasing intention can be stimulated by higher sentiment. The higher the sentiment, the more investment will be made in housing market. From an academic perspective, this study contributes to the existing literature by considering the importance of market collective attitudes, i.e. “market sentiment”. From a practical perspective, our findings are expected to facilitate a better-informed decision-making process for homebuyers, property developers and policy makers.

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Notes

  1. https://www.stats.gov.cn/tjsj/ndsj/renkoupucha./2000pucha/html/l0804a.htm.

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Acknowledgments

This study was funded by the China Scholarship Council and National Natural Science Foundation of China (No.72004199) .

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Authors and Affiliations

  1. School of Public Affairs, Zhejiang University, Zhejiang, China

    Zhaoyingzi Dong

  2. Department of Building and Real Estate, The Hong Kong Polytechnic University, Hong Kong, China

    Eddie C. M. Hui

  3. Research Institute of Economics and Management, Southwestern University of Finance and Economics, Chengdu, China

    Daichun Yi

Authors
  1. Zhaoyingzi Dong
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  2. Eddie C. M. Hui
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  3. Daichun Yi
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Correspondence to Eddie C. M. Hui.

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Appendix

Appendix

See Table 6.

Table 6 Correlation table of sentiment, housing return and housing price
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Dong, Z., Hui, E.C.M. & Yi, D. Housing market sentiment and homeownership. J Hous and the Built Environ 36, 29–46 (2021). https://doi.org/10.1007/s10901-020-09784-y

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