Corruption, Land, and Housing: The Cleaning and Chilling Effects of China's Anti‐Corruption Campaign

ABSTRACT This study examines the impact of China's anti‐corruption campaign on the land and housing markets. Leveraging the exogeneity of the central inspection activities, we apply a General Difference‐in‐Differences model to assess the campaign's effect using provincial panel data from 2005 to 2019. Our findings show that the campaign reduced land prices by 668.7 yuan/m 2 (29.5% of the average, same below), with residential land prices falling by 880.7 yuan/m 2 (21.4%) and commercial land prices by 497.6 yuan/m 2 (9.5%), while land transaction areas remained unaffected. We identify two opposing forces: a “cleaning effect,” where reduced bribery raises land prices, and a “chilling effect,” where local officials restrict private firms' access to land market, thereby suppressing demand and lowering prices. The chilling effect dominates, causing an overall decrease in land prices. This price decline subsequently extends to the housing market, reducing housing prices by 12% (600 yuan/m 2 ). Residential property prices decreased by 15.6% (737.7 yuan/m 2 ), while commercial business property prices dropped by 6.6% (471.6 yuan/m 2 ). The decline in housing prices directly lowers homeownership costs and enhances residents' welfare.