The effects of macroprudential policies on house prices: Evidence from non-ordinary house purchasing policy using China real transaction data

Abstract

This paper contributes to the international policy debate on the effect of macroprudential policy on housing prices. Our identification relies on the fact that ordinary housing and non-ordinary housing in Beijing face different loan-to-value (LTV) restrictions and transaction tax rates. This paper uses regression discontinuity (RD) design to test whether the differentiated regulation of ordinary housing and non-ordinary housing caused a discontinuous change in housing prices with house-level transaction data. We find that housing prices have a significant discontinuous decline at the cutoff point caused by macroprudential policy, which we take 140 m² s since it is the identification standard of non-ordinary housing. Further, we carry out RD-DID analysis to investigate the influence of loan-to-value (LTV) restrictions on housing prices. We find that around 2 % decline in house prices is caused by credit policy.