How do house prices affect subjective wellbeing in urban China? Mediating effects of subjective socioeconomic status and household consumption

Over the past two decades, house prices in Chinese large cities have increased rapidly and become progressively unaffordable for the majority of people. Although previous studies have explored the association between house prices and urban residents' subjective wellbeing (SWB) in the Chinese context, the issue of whether the house price-SWB association varies with the number of residential properties is under-explored. Moreover, little effort has been made to unravel the mechanisms behind the relationship between house prices and SWB through subjective socioeconomic status and household consumption. Using three waves of data from the China Labour-Force Dynamic Survey, this study examines the effects and mechanisms through which house prices affect SWB. The results indicate that house prices exert a negative impact on SWB. These results are robust to instrumental variable (IV) analysis by using land supply per capita as the IV to address endogeneity. The results from moderation analysis show that the number of residential properties moderates the house price-SWB association. Additionally, the lowering of the subjective socioeconomic status and the shrinking expenditure on education and entertainment are two possible pathways through which the rise in house prices negatively affects SWB. Although people with residential properties tend to increase spending on education and entertainment as house prices rise, those with only one residential property experience a significant decline in their subjective socioeconomic status and consequently experience a decline in their SWB, thus demonstrating the moderating role of the number of residential properties in the mechanisms. Our findings identify an urgent need for intervention in the overheated real estate market and the concomitant social inequality.