Does the size of the housing rental market stabilize regional economic fluctuations? Evidence from China's large- and medium-sized cities

• Published in: Habitat international Vol. 153; p. 103189
• Main Authors: Kong, Yu, Dong, Junhao
• Format: Journal Article
• Language: English
• Published: Elsevier Ltd 01.11.2024
• Subjects: Housing rental market size; Large- and medium-sized cities; Regional economic fluctuations; Housing rental market size; Regional economic fluctuations; Large- and medium-sized cities
• ISSN: 0197-3975
• DOI: 10.1016/j.habitatint.2024.103189

The influence of the housing rental market on economic operations is a significant concern. Particularly in China, the rental market has been undergoing a transition from being disregarded to being valued. Based on an analytical framework referencing the three-sector theory of metropolitan economic growth, this study explores the impact of rental market size on regional economic fluctuations and its influence channels using a panel of 69 large and medium-sized cities from 2010 to 2019. The results indicate that increased rental market size is significantly correlated with decreased regional economic fluctuations through housing sales and labor market channels. Specifically, house price depression, house investment stability, labor allocation, and employment stability effects are crucial channels through which the size of the rental market influences regional economic fluctuations. In addition, the marginal effect of rental market size on regional economic fluctuations is smaller in cities with higher economic development. The conclusions imply that policymakers should not focus on how to unilaterally expand the housing rental market, but should strategically compensate for the defects of regional housing rental–related institutional systems. •The size of the housing rental market is measured from the supply perspective.•The increase in rental market size can reduce regional economic fluctuations.•The channel by which rental market size stabilizes the regional economy is studied.•The bottleneck of rental market size stabilizing the regional economy is discussed.