Conference Agenda

Abstract: With the commercialization of housing, the degree of real estate financialization has been deepening, and the scale of local government debt has also increased. At the same time, in the face of the huge capital requirements caused by the marketization of real estate, borrowing with land as a guarantee and debt repayment source has become the main choice. To clarify the interplay between real estate financial risks, land financing and local government debt expansion. Based on panel data from 224 prefecture-level cities from 2010 to 2019. Empirical results show that real estate financial risks promote the expansion of local government debt, and land financing plays a partial intermediary effect. The TVP-VAR model was used to observe the interaction between the three and the impulse response at different hysteresis. The results show that the shock response of the three has strong short-term effect and lag effect. The findings provide relevant policy recommendations for local governments.

Keywords: Real estate financial risk; land financing; Local debt; intermediary effect; time-varying parameter vector autoregressive model

COVID-19 has had a significant impact on the global economy, including the residential mortgage market. China responded to the outbreak of COVID-19 by shutting down its economy for social distancing in late January 2020 and reopened most of the country in early March, providing a unique opportunity to study the effects of the pandemic on residential mortgages. Using consumer asset-backed securities (ABS) data, this study assesses the performance of residential mortgages in China during the global health crisis.

The study finds that Chinese consumers were severely affected during the peak of the pandemic in February 2020, with younger borrowers, borrowers in the service industry, self-employed borrowers, and borrowers with lower income being hit the hardest. These findings suggest that government subsidies should be targeted towards the population who are disproportionately affected by COVID-19.

As China re-opened, the study found that back-to-work rates in different provinces and sectors were negatively correlated with infection rates, implying that the most stringent containment policies may improve the economy in the long-term, although they hurt the economy in the short-term.

Since March 2020, there has been a strong rebound in Chinese consumer loans' performance, with the strongest recovery observed in residential mortgages among relatively wealthier borrowers in China's population of 1.4 billion. These findings provide insight into the unique effects of the pandemic on the residential mortgage market in China and can inform policymakers, lenders, and borrowers in other countries.

Abstract: Demand-side housing subsidy scheme has been widely adopted in many countries to improve housing affordability but the quantitatively investigation of the policy effect is still rare. This study evaluates the effect of the Housing Provident Fund (HPF), the largest demand-side housing subsidy scheme in the world but with hot debate, on housing affordability in mainland China. We construct a comprehensive housing affordability indicator by considering both down payment affordability and monthly repayment affordability, which could reveal the potential pass-through effect in the full cycle of housing affordability. Taking 2020 as an example, the results suggest that the HPF increases housing affordability by 77.8% on average when assuming down payment affordability and monthly repayment affordability are equally important. The subsidized interest rate and withdrawn balance can compensate for the increased HPF loans transferred from the lower required down payment. Notably, the impact concentrates on cities where households have relatively favorable housing affordability even without the HPF. Further simulations show that potential reforms of the HPF cannot solve the housing affordability problem in cities such as Beijing, Shanghai, Shenzhen, and Xiamen. This study highlights the divergence in the HPF’s effect between types of cities and provides references for the ongoing reform of the HPF.

Short-term investors in housing market profit from purchasing houses at relatively lower prices. To reveal its mechanisms from the prospective of buyers’ behaviors, we compare the search behaviors between short-term investors and first-time buyers as they both prefer small houses with similar characteristics. And we construct a buyer search model to theoretically show that buyers with higher search costs and loan-to-value ratios purchase houses at higher prices, while cash discounts increase with buyer search costs. Then we estimate short-term investors and first-time buyers’ primitive parameters and conduct counterfactual analyses by utilizing theoretical structures and data distinguishing first-time buyers and short-term investors with their payment information. We find that short-term investors purchase houses at 6.34% lower prices than first-time buyers for short-term investors’ 36% lower search cost and 83% lower loan-to-value ratio[JG1] . We also illustrate that if the first-time buyers' search cost reduces to the short-term investors’ level, short-term investors’ return from purchasing houses at lower prices will decrease by 19%. The findings demonstrate the importance of improving the information infrastructure of the housing market and increasing mortgage convenience in restraining flipping.

The choice of location for households is a complex process involving a range of influencing factors, with households making trade-offs between accessibility and housing costs based on their own needs and preferences. This paper examines residential location choice among residents of Hangzhou city, using a logit model framework based on discrete choice analysis. Empirical analysis is conducted at the micro level by applying the data of Hangzhou neighborhoods and residents' travel data to reveal the influence of accessibility and other factors on residents' residential location choices. The study finds that (1) accessibility, housing prices are significant factors affecting residential location choice in Hangzhou; (2) Accessibility factors such as commuting time to work and the convenience of transportation facilities such as subway have significant explanatory power on residential location choice, and the improvement of these accessibility factors will make residents tend to choose the residential location. Specifically, holding other factors constant, for every minute increase in commuting time, the probability of residents choosing a particular residential location decreases by 0.96 times; and (3) a joint choice model was constructed to examine the trade-off between housing prices and accessibility in residential location choices. The results showed that residents with different socio-economic characteristics exhibited certain differences in their housing price and accessibility preferences. For example, high educated households are more likely to live in districts with more development potential, even though these may be farther away from traditional urban centers. Households with a college degree or higher are 8.68 times more likely to choose a residential area away from the city center and at a higher price than those with less education who choose a suburban area and at a lower price. In the same comparison, the advantage ratio for households with a college degree or higher to choose a residential area close to the city center and with higher prices is 4.20.