Convergence of Regional Housing Prices in China

Abstract

This paper uses the sequential panel selection method (SPSM) to examine the structure convergence of regional housing prices in China. The stationary processes are distinctly detected and robust evidence is assured to indicate that it holds true for six-sevenths of the cities in China. The results mean that those cities are in accordance with the law of one price theory and the ripple effect. The results consider that the convergence order of housing prices from first-tier cities to the target city (Shanghai, China) is lower than second-tier and third-tier cities, in total. A housing space transmission mechanism exists from Eastern to Central China and then to Western China, in total, by the transmission order; this means that a city’s housing prices in those regions converge in space, which makes the geographically surrounding cities’ housing prices converge.