The Effect of House Prices on Fertility: Evidence from House Purchase Restrictions

We study the causal effect of house price increases on China’s great birth rate decline since 2016, as well as on the country’s marriage market and private educational investments. Using quasi-experimental increases in urban house prices in nearby unregulated prefectures—driven by capital spillovers resulting from house purchase restrictions in large metropolises—we find that the birth rate significantly decreased in these prefectures. This fertility reduction is driven by rural individuals who do not own urban homes, particularly in places where sex imbalance is notable, indicating competition in the marriage market, and where rural schools are scarce, signifying the role of educational opportunities. Our study provides the first causal evidence for a previously underexplored channel through which house prices impact fertility outcomes: by affecting the price of educational resources and marriage market benefits associated with homeownership. A back-of-the-envelope calculation suggests that this positive house price shock accounted for a non-negligible share of the aggregate birth decline.