Examining the local government financial pressure on housing prices: evidence from China
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Abstract
The study examines the influence of local government financial pressure on average real estate sales prices. Annual data from the Chinese National Bureau of Statistics from 2000 to 2020 were analyzed based on the vector autoregressive model. Fixed asset investment and the growth rate of the population were included as moderators to analyze their moderating effects on the relationship between local government financial pressure and average real estate sales price. Local government fiscal pressure has a significant positive impact on the average real estate selling price, fixed asset investment, and population growth rate are negatively correlated with average real estate sales price. Therefore, this paper suggests reducing the fiscal revenue and expenditure gap faced by local governments, alleviating the financial pressure on local governments, increasing the proportion of residential land supply, and limiting the dependence of local governments on land finance, to restrain the price fluctuation of the real estate market.
Keywords: Fixed assets; growth rate; Housing price; investment; local fiscal pressure; population.
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