Examining the impact of home purchase restrictions on China's housing market

This paper studies the impact of home purchase restrictions on China's housing market. We estimate a structural model household preference for housing, real estate developers' pricing decisions, and equilibrium market outcome in five large cities. By comparing estimation results from pre- post-policy intervention, we find that, after are implemented, overall demand most cities becomes weaker less price elastic; meanwhile, developers face higher holding costs thus willing to lower prices sell more quickly. Counterfactual analyses show that some alternative policy designs cause change could achieve larger consumer welfare social than implemented policy.