The Price of Green: Environmental Regulation and Its Impact on China's Housing Market

This study investigates the impact of environmental regulation on housing prices in China from 1999 to 2023. Using the empirical method, we find that stricter environmental regulations can lead to a significant rise in real estate prices, and this positive correlation is significant at 1% level for several specifications of the regression model. Theoretically, green policies appear to influence the housing market by improving property quality, while simultaneously reducing the local labor supply and raising construction costs, thereby altering market demand and supply. Regionally, the higher-priced housing markets in eastern China are less sensitive to these regulatory costs, whereas the lower-priced markets in the west exhibit a stronger positive price response. These findings offer a more thorough assessment of environmental legislation and important insights for policymakers aiming to balance sustainable development with housing affordability. Furthermore, the paper proposes differentiated regulations that can be adopted in response to local housing market conditions.