Responses of Housing Price under Different Directions of Population Change: Evidence from China's Rust Belt

Population growth has been widely regarded as an important driver of surging housing prices of urban China, while it is unclear as yet whether population shrinkage has an impact on housing prices that is symmetrical with that of population growth. This study, taking 35 sample cites in Northeast China, the typical rust belt with intensifying population shrinkage, as examples, provides an empirical assessment of the roles of population growth and shrinkage in changing housing prices by analyzing panel data, as well as a variety of other factors in related to housing price, during the period of 1999-2018. Findings indicate that although gap in housing prices was widening between population growing cities and population shrinking cities, the past two decades witnessed an obvious rise in housing prices of those sample cities to varying degree. Changes in population size did not have a statistically significant impact on housing prices volatility of sample cities, because population reduction did not lead to a decline in housing demand correspondingly and an increasing housing demand aroused by population growth was usually followed by a quicker and larger housing supply. The rising housing prices in sample cities was mainly driven by factors like changes in land cost, investment in real estate, GDP per capita and household number. However, this does not mean that the impact of population shrinkage on housing prices could be ignored. As population shrinkage intensifies, avoiding the rapid decline of house prices should be the focus of real estate regulation in some population shrinking cities of Northeast China. Our findings contribute a new form of asymmetric responses of housing price to population growth and shrinkage, and offer policy implications for real estate regulation of population shrinking cities in China's rust belt.