State-Space Modeling of Housing Sentiment for Regressing Changes of Real Estate Prices Following Short-Term Control Policy in China

Author:

Zang Taiyi1ORCID,Gu Hongmei12

Affiliation:

1. School of Economic, Jilin University, Changchun 130015, China

2. Center for Chinese Public Sector Economic Research, Jilin University, Changchun 130015, China

Abstract

Government may need to launch policies to stabilize real estate prices being away from unusual rise at an unexpected pace through short-term regulations of sales and purchases. Short-term control policies are often not effective immediately after withdrawal, but their effect easily attracts swift and intensive responses of consumer sentiments. The change in sentiment synchronizes with that of expectations, which together account for housing price in response to restrictions following short-term policies. The research objective of this study is to establish the role of housing sentiment in policymaking to regulate and stabilize real estate prices. To cope with the tough tissue of unclear knowledge about customers’ sentiments, we employed the state-space model to explore the impact of short-term regulatory policies on housing sentiment. The research objective of this study also involves optimizing the instrument for assessing housing sentiments. Results showed that: Firstly, the short-term regulation and control policy enhanced positive sentiment in the housing market. Secondly, high positive sentiment further increased the cyclical prices. Thirdly, the upsurge of consumer sentiment has weakened the impact of short-term control policies on real estate market price. Lowered housing sentiment resulted in a reduction in the effectiveness of short-term control policies. Overall, our study verifies that high positive consumer sentiments will result in an increase in housing prices, hence it is customers’ sentiments that caused the failure of short-term control policies.

Publisher

MDPI AG

Subject

Management, Monitoring, Policy and Law,Renewable Energy, Sustainability and the Environment,Geography, Planning and Development,Building and Construction

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