House prices, financing mode and economic growth

This study delves into the intricate relationship between house prices and the economy, using a combined dataset of 287 Chinese cities and incorporating urban investment bonds, local government financing platforms, and land resources statistics. Key findings indicate that rising house prices boosted per capita gross domestic product before the financial crisis, but this effect diminished after the crisis. Although rising prices increased total output, they also heightened local debt risks, resulting in a double-edged impact. The study also found that government policies that caused a rapid increase in house prices disrupted resource allocation, jeopardizing urban sustainability. Research emphasizes the importance of carefully designed policies to ensure the balanced development of the real estate market, which is conducive to long-term economic health.