E2023009                                                        2023-03-20
 

Jiayin Hu

Maggie Hu

Shangchen Li

Yingguang Zhang

Zheng Zhang

Abstract

We investigate the spillover impact of local housing price growth on rental supply. Using proprietary contract data from a leading PropTech rental platform in China, we find that individual landlords experiencing higher housing price growth in their neighborhoods sign shorter-duration contracts and are less likely to renew with the platform. Our identification exploits a home purchase restriction policy with treatment cutoffs. This effect is stronger for landlords owning multiple rental homes, units with higher marketability, and more recent and extreme growth, consistent with extrapolative expectation theories whereby housing booms improve landlords’ expected home sale opportunities, thus reducing rental supply duration.

Keywords: Rental housing supply, contract duration, extrapolative expectations, housing price

growth, rental intermediary

JEL classification: G12, G21, G23, L85, R31, R38

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