Impact of Fertility Relaxation on the Housing Market Outcomes

Abstract

Using an administrative microlevel dataset of housing resale transactions in a major Chinese city, we exploit China's relaxation of the One-Child Policy in 2013 as an exogenous shock on fertility to analyze the effect of fertility relaxation on housing market outcomes. Our results show that housing prices (transaction volume) for units with more bedrooms increased by 2.2% (9.9%) compared with those with fewer bedrooms after the policy announcement. Consistently, city-level analysis employing an alternative identification strategy reveals that cities experiencing greater exposure to the policy change exhibited more pronounced increases in housing prices after the fertility relaxation. The underlying mechanism is related to increased fertility, as the surge in housing demand for units with more bedrooms was primarily driven by younger buyers aged 18–29 with higher fertility intentions. Our findings reveal the consequences of fertility relaxation on the housing market, which have important implications for fertility and housing policy development.

Keywords: One-Child Policy, Fertility, Housing Market