The Effect of Cancelling the Home Purchase Restriction Policy on Rental Rate in China-Difference-in-differences Analysis

Abstract

In this study, I want to study and evaluate the effect of cancelling the home purchase restriction policy in 2014 on rental rate in China. I set up Tianjin and Beijing as the treatment and control group respectively, since Beijing and Tianjin both had implemented the home purchase restriction policy in 2010, but Tianjin had cancelled this restriction policy in 2014 and Beijing still implemented it. Then I use the individual level data of Tianjin and Beijing in 2013 and 2015 from the Chinese General Social Survey (CGSS), and build a difference-in-differences linear probability model. After running the data in the STATA, I get results showing that cancelling the home purchase restriction policy can significantly decrease the rental rate by 10.2%, and this effect is statistically and economically significant.