The effect of housing prices on consumption and economic growth – the case of Taiwan

Lin, Tsoyu Calvin; Hsu, Shih-Hsun; Lin, Yu‐Chi

doi:10.1080/13547860.2019.1584958

Cited by 9 publications

(8 citation statements)

References 12 publications

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“…The long-standing gap has created housing pressure. According to the theory of political economy, housing is a necessity for household labor reproduction, and the housing pressure caused by rising housing prices affects the labor reproduction of households, which then affects the income and consumption of laborers [32]. In addition, most of the migrants take out loans to buy houses, and the mortgage accounts for a high proportion of their income.…”

Section: Hypothesis 1 (H1)mentioning

confidence: 99%

Local Government’s Land Finance Dependence and Migrants’ Settlement Intentions: Evidence from China

Zhang

2023

Land

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In the context of China’s new urbanization construction, it is crucial to deal with the issue of migrants. While land finance, as an essential means of local government financing in China over the past three decades, has made important contributions to China’s economic growth, the impact of land finance on the settlement intentions of migrants still needs to be studied. This study considered cross-sectional data containing 78,642 samples based on the 2017 China Migrants Dynamic Survey 2017 (CMDS) and China Land and Resources Statistical Yearbook. In addition, a binary choice model was constructed, and the impact of the degree of land finance on the settlement intentions of migrants for the prefecture-level cities in China was empirically analyzed. With the help of the mediating- and moderating-effect models, the impact of the degree of land finance on the settlement intentions of migrants was examined from the perspectives of housing pressure, social security, and housing property rights. The results show the following: (1) The higher the degree of land finance, the lower the settlement intentions of migrants. (2) Land finance’s effect on settlement intentions is stronger for urban domiciles, low-skilled laborers, in large cities, and eastern and southern cities in these samples. (3) The higher the degree of land finance, the greater the housing pressure on the migrants, further reducing the settlement intentions of these individuals. However, social security and homeownership can reduce the negative effect of land finance on the settlement intentions of migrants. This paper provides policy implications for the construction of new urbanization and the realization of modernization.

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Section: Hypothesis 1 (H1)mentioning

confidence: 99%

Local Government’s Land Finance Dependence and Migrants’ Settlement Intentions: Evidence from China

Zhang

2023

Land

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“…However, consumption in all Chinese ethnic regions was responsive to the changes in equity prices in both the short run and long run. Lin et al (2019) claimed that in Taiwan, the rising house prices had a negative effect on consumption. The finding indicated that high housing prices trigger the crowding-out effect on consumption and in turn contribute to sluggish economic growth.…”

Section: Literature Reviewmentioning

confidence: 99%

“…These norms, expressed by Shiller 10 , during his speech in the 2017 Master Think Bank Forum in Taiwan, were unusual and doubtful to appear concurrently in the housing market (Chuang, 2017). With the amendment of real estate property and transaction tax laws in 2014, property and transactions taxes were constricted, housing transaction began to experience a radical declination (Lin et al, 2019). Yet, the low mortgage rate and institution of base-free loan payment period have contributed on housing price to scuffle between sellers and buyers for over a period of time.…”

Section: Introductionmentioning

confidence: 99%

“…The LC-PIH serves as the theoretical basis that links the consumption and wealth channels, and implies that the relationship between asset values (wealth) and consumption may be attributable to the direct asset wealth effect. The liquidity constraint 11 (Aladangady, 2017;Aoki et al, 2002;Benito, 2009;Canner et al, 2002;Ebner, 2010) and common factors 12 (Attanasio et al, 2009;Case et al, 2005;Chen & Wang, 2011;Dvornak & Kohler, 2007;Lin et al, 2019) hypotheses should also be taken into account in the empirical analysis.…”

Section: Introductionmentioning

confidence: 99%

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Will the Housing Wealth Effect Compensate the Macro-Economy? Evidence From Taiwan’s Domestic Consumption

Cheng

Wang

Peng

et al. 2020

International Journal of Strategic Property Management

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This paper examines the relationship between the escalation in housing prices and categories of Taiwan’s domestic consumption. While disposable income remains constant, a rapid escalation in housing prices should have a negative impact on unaffordability within society. However, under the hypothesis of the housing wealth effect, an increase in housing values should compensate the macro-economy by increasing consumption in the GDP calculation. Taiwanese data from 2007Q1 to 2018Q1 were adopted as the sample. From the vector error correction model results, it was found that over the course of the long-run equilibrium relationship, there was a statistically significant positive relationship that the society consumes more on durable goods of communication-related nature, as well as on non-durable goods such as personal clothing and accessories and leisure/cultural tourism. As for the short-run dynamic adjustment, there was a statistically significant positive relationship that the society consumes more in the durable goods component categories. It was identified that transportationrelated consumption accounted for the major part of the durable goods component. Therefore, with the rapid escalation in housing prices, it was observed that these consumption would compensate the consumption figures in the GDP calculation in Taiwan, thereby providing evidence that housing prices were related to macroeconomic performance.

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“…Such a reduction in investment will negatively impact economic growth, even though the net economic impact of housing price increase could still be positive. In some country studies, as in Lin et al ( 2019 ) for Taiwan, an increase in house price was found to result in crowding-out of consumption which consequently slowed the economic growth.…”

Section: Introductionmentioning

confidence: 95%

Impact of House Price on Economic Stability: Some Lessons from OECD Countries

Asadov

Ibrahim

Yildirim³

2023

J Real Estate Finan Econ

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Despite having abundant literature blaming a faulty financial system and exuberant‎ price expectations as the primary causes of housing bubbles, there is a lack of research that looks at the impact of house price instability on the economy. This study aims to fill this gap by thoroughly examining the connection between house prices and economic output, and the effect of house price volatility on economic stability. Drawing from long-spanning quarterly data from 17 OECD countries from 1970 to 2019, the study develops and tests economic growth and volatility models to uncover significant insights. The empirical results show that house price returns have a significant asymmetric impact on economic growth, with negative returns having twice the effect of positive ones. Moreover, the results indicate that house price volatility significantly contributes to economic instability. In light of these findings, the paper concludes with valuable policy recommendations to enhance the housing market and improve overall economic stability. This study provides a compelling argument for the importance of closely monitoring and regulating the real estate market in order to maintain a healthy and stable economy.

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The effect of housing prices on consumption and economic growth – the case of Taiwan

Cited by 9 publications

References 12 publications

Local Government’s Land Finance Dependence and Migrants’ Settlement Intentions: Evidence from China

Local Government’s Land Finance Dependence and Migrants’ Settlement Intentions: Evidence from China

Will the Housing Wealth Effect Compensate the Macro-Economy? Evidence From Taiwan’s Domestic Consumption

Impact of House Price on Economic Stability: Some Lessons from OECD Countries

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