The impact of structural adjustment on housing prices in China

Studies of the factors that influence housing prices have focused on housing characteristics, governmental policies, environmental goods, macroeconomic and social fundamentals, and so on. However, the effect of industrial structural adjustment on housing prices is worthy of further investigation. In China, it would be helpful to measure this effect to coordinate housing policy and the ‘Made in China 2025’ strategy, which aims to accelerate industrial restructuring. We selected a spatial panel data model to quantify the effects of the industrial rationalisation and sophistication attributable to spatial dependence in housing prices. Estimation results show that structural adjustment has a statistically significant effect on housing prices that varies widely across regions. In descending order, the impact of industrial structure sophistication decreases in eastern, central, western, and northeastern China. This finding suggests that the government should match housing with local industry, prevent excessive real estate development in conventional agricultural areas, and pay close attention to changes in housing prices caused by increasing industrial restructuring.