Inflation-hedging properties of regional Chinese real estate market: evidence from 35 cities in China

Wu, Y. ORCID: https://orcid.org/0000-0003-0354-5658 and Tidwell, A. (2015) Inflation-hedging properties of regional Chinese real estate market: evidence from 35 cities in China. Applied Economics, 47 (60). pp. 6580-6598. ISSN 0003-6846 doi: 10.1080/00036846.2015.1080811

Abstract/Summary

The housing markets in China have been gaining considerable interest from investors, but the inflation-hedging characteristics of housing remain ambiguous. Based on Chinese city-level data, this study evaluates different inflation-hedging properties in eastern, middle and western real estate markets using panel vector autoregressive (PVAR) models. Findings suggest middle real estate markets afford the best hedging opportunities for expected inflation, which is robust considering housing market heterogeneity, financial crisis and the 2010 purchase restriction order. Moreover, hedging efficacy of anticipated inflation differs between markets with low and high supply–demand ratio.