Household savings rates and housing prices in China—Based on cohort analysis

Currently, China’s aging population, high savings rate and high housing asset prices coexist, which has become a hot issue in academic research. First, considering the life-cycle hypothesis and overlapping generations model, asset prices are negatively correlated with the population dependency ratio and positively correlated with household savings. Second, based on census data from prefecture-level cities, a pooled regression model and two-stage least squares (2SLS) are used in this empirical research. The child dependency ratio was found to have a significant negative impact on housing prices, while the elderly dependency ratio had a positive impact on housing prices. The positive relationship between household savings and housing prices is highly significant. Finally, the interaction analysis shows that the impact of population aging on housing prices differs under different levels of household savings; thus, population aging affects housing prices through household savings, and the mediator dilutes and weakens this impact. The elderly generation’s release of savings could gradually inhibit housing prices. Population aging causes long-run downside risks but not a market meltdown.

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Why Are Saving Rates of Urban Households in China Rising?

American Economic Journal Macroeconomics ◽

10.1257/mac.2.1.93 ◽

2010 ◽

Vol 2 (1) ◽

pp. 93-130 ◽

Cited By ~ 137

Author(s):

Marcos D. Chamon ◽

Eswar S. Prasad

Keyword(s):

Financial Assets ◽

Household Savings ◽

Demographic Groups ◽

Education And Health ◽

Savings Rate ◽

Future Income ◽

China Rose ◽

Age Profile ◽

Saving Rates ◽

Savings Rates

From 1995 to 2005, the average urban household savings rate in China rose by 7 percentage points, to about one-quarter of disposable income. Savings rates increased across all demographic groups, and the age profile of savings has an unusual pattern in recent years, with younger and older households having relatively high savings rates. We argue that these patterns are best explained by the rising private burden of expenditures on housing, education, and health care. These effects and precautionary motives may have been amplified by financial underdevelopment, including constraints on borrowing against future income and low returns on financial assets. (JEL D14, E21, O12, O18, P25, P36)

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Social Norms and Household Savings Rates in China

Review of Finance ◽

10.1093/rof/rfy029 ◽

2018 ◽

Vol 23 (5) ◽

pp. 961-991

Author(s):

Yvonne Jie Chen ◽

Zhiwu Chen ◽

Shijun He

Keyword(s):

Social Norms ◽

Filial Piety ◽

Household Finance ◽

Household Savings ◽

Savings Rate ◽

Model Predictions ◽

Enforcement Mechanisms ◽

Using Data ◽

Period Model ◽

Savings Rates

Abstract We study the effects of Confucian social norms on savings rates in China. In our simple two-period model, parents have the option to invest in either a risk-free asset or their children’s human capital. We assume that the filial piety norms and thus the enforcement mechanisms for supporting old-age parents differ across regions. Consequently, the probability of children’s non-performance of their repayment obligations to parents and the returns parents can expect from investing in their children vary. We test the model predictions using data from the China Household Finance Survey. We find that stronger Confucian social norms reduce the gap in the savings rate between families with sons and with daughters. Modeling default by children as a function of the prevailing social norms gives us the flexibility to study the impacts of declining Confucian influence on consumption–savings trends in China.

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Housing price and household savings rates: evidence from China

Journal of Chinese Economic and Business Studies ◽

10.1080/14765284.2013.814461 ◽

2013 ◽

Vol 11 (3) ◽

pp. 197-217 ◽

Cited By ~ 9

Author(s):

Shi Li ◽

John Whalley ◽

Xiliang Zhao

Keyword(s):

Housing Price ◽

Household Savings ◽

Savings Rates

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The disparities in Chinese urban and rural household savings rates

Journal of the Asia Pacific Economy ◽

10.1080/13547860.2021.1915595 ◽

2021 ◽

pp. 1-27

Author(s):

Dan Yang ◽

Tianheng Wang

Keyword(s):

Rural Household ◽

Household Savings ◽

Savings Rates

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A Model of Household Savings and Alternative Investments in Rural China

Asian Economic Papers ◽

10.1162/asep_a_00706 ◽

2019 ◽

Vol 18 (2) ◽

pp. 145-162

Author(s):

Yuekai Cheng ◽

Hongyi Li ◽

Qi Sun ◽

Yu Wang

Keyword(s):

Interest Rates ◽

Land Tenure ◽

Rural Areas ◽

Rural Economy ◽

Rural China ◽

Housing Prices ◽

Capital Allocation ◽

Agricultural Product ◽

System Reform ◽

Household Savings

This paper explores the relationship between monetary policy, prices, and rural household savings and investment behavior in China. We first develop a two-period life-cycle model with bequests for China's rural economy to analyze the impacts of interest rates, agricultural product prices, and housing prices on rural households’ capital allocation choices (households’ savings deposits, investment in private housing, and investment in agricultural productive fixed assets). We then empirically estimate the theoretical model equations with a newly compiled panel dataset covering the rural areas of 26 provinces from 2001 to 2016. Our empirical results suggest that high housing prices are harmful to the rural economy as they reduce productive investment and consumption. An efficient interest rate market and land tenure system reform are recommended.

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Australia housing slump will hike debt risks

Emerald Expert Briefings ◽

10.1108/oxan-db241358 ◽

2019 ◽

Keyword(s):

Economic Growth ◽

Housing Market ◽

Housing Prices ◽

Bank Lending ◽

Fourth Quarter ◽

Household Savings ◽

Content Type ◽

Private Spending ◽

Construction Activity ◽

Mortgage Defaults

Subject Australia's housing market. Significance Construction activity fell to its lowest level for five years in December as housing prices slumped and bank lending conditions tightened. Economic growth and employment both probably declined in the fourth quarter last year. Impacts Prices should bottom out this year, after a net 10-15% drop; a steeper decline is possible, especially in Sydney. Economic growth will be affected, with construction and retail most vulnerable to reduced private spending. Falling household savings and existing high debt levels will lift risks of mortgage defaults as repayment costs rise.

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