摘要：
Purpose
Amidst China’s declining consumption rate and unprecedented downward pressure on housing prices, this study aims to critically explore the asymmetric impact of housing value ffuctuations on household consumption scale and structure. Speciffcally, it questions the traditional life-cycle-permanent-income hypothesis by investigating whether housing depreciation suppresses consumption more signiffcantly than appreciation stimulates it. The purpose is to understand the behavioral mechanisms that are rooted in prospect theory that drive households to alter spending habits during asset shrinkage, thereby addressing the paradox of stagnant consumption despite historical real estate booms.
Design/methodology/approach
Based on microlevel data from ffve waves of the China Household Finance Survey spanning 2011–2019, covering 59,977 observations, this study uses ffxed-effect regression models to analyze the asymmetric wealth effects. The approach uses prospect theory to operationalize loss aversion, separating the sample into appreciation and depreciation groups to test distinct coefffcients. Furthermore, the study uses mediation models to examine transmission mechanisms, like speciffcally risk preference, debt burden and credit demand, and conducts extensive heterogeneity analyses across household demographics, income levels and housing characteristics.
Findings
The study reveals a signiffcant asymmetry: housing depreciation reduces consumption far more severely than appreciation stimulates it. This suppression is driven by loss aversion, which manifests as heightened risk aversion, increased debt burdens and reduced demand for nonhousing credit. The negative impact is particularly pronounced among young/middle-aged female-headed households, low-income groups and owners of multiple or lower-quality properties. In addition, housing devaluation is found to hinder consumption upgrading, prompting a structural shift where households cut high-end spending in favor of lowcost nonessential goods.
Originality/value
Unlike prior literature predominantly focusing on the positive wealth effects of rising prices, this paper critically addresses the overlooked consequences of housing depreciation. By elucidating the asymmetric mechanisms through prospect theory, it contributes to a better understanding of household.fragility during market downturns. The ffndings challenge the assumption that housing assets purely stimulate consumption and offer timely insights for policymakers to stabilize the real estate market and design targeted financial interventions for vulnerable households to sustain economic growth.
From Feng, Yu, Xin Ge, and Lingzhen Yao. "Housing value changes and consumption: the role of asymmetry." International Journal of Housing Markets and Analysis (2026): 1-27.
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