The Impact of Curbing Housing Speculation on Household Entrepreneurship in China

Round 1

Reviewer 1 Report

Comments and Suggestions for Authors

General assessment

The present paper mobilizes a set of ideas relating the how measures that discourage housing speculation increase entrepreneurial opportunities, innovative development, and local households’ social network investments that contribute to starting a business, with the increasing number of urban newly registered industrial and commercial enterprises, contributing to the productive economy, to the detriment of the speculative capitalist economy.

The major interest has to do with how critically it explores the relations between these variables in general. Very well supported study and based on solid and rigorous multivariate statistical analysis. But above all, this paper is important because it bridges the gap defining of how political and economic measures of home purchase restrictions in China, have results in the household entrepreneurship choices, in reaction to housing speculative demand when suppressed. The paper is innovative because it shows evidence of how home purchase restriction has been adopted in China and it has been shown to be effective in cooling down the heated housing market. The authors found that discouraging housing speculation significantly reduces the likelihood and the plan of local households purchasing new homes and lowers the house price expectations of local households.

It is well written and structured, and in spite of some theoretical, conceptual and methodological shortcomings, we recommend the article for publication, but only after some changes introduced by the authors. The suggested changes, some more profound, others are more superficial, follow the next point with a more specific comment.

Specific assessment

1.     The introduction it’s good, because it´s an overview of the contents of the research in the paper without going into too much detail. Only a few paragraphs are enough. Briefly describe the importance of the study area. Specify the relevance of the publication of the current paper, explaining how this present work contributes to the progress of knowledge in this line of research in real estate studies. However, the introduction should include one or two paragraphs explaining the factors behind real estate speculation, which are the reasons why real estate and land prices rise significantly, distorting the values practiced in the housing and rental market; and the need for a public policy that stops this speculation in order to fulfill the right to housing. The role of the interventionist and socialist State is essential to stop the unsustainable capitalist logic of real estate overheating, which produces serious collateral damage to the social fabric such as: evictions, gentrification, etc, limits to social progress and human development.

2.     The authors need to recognise the influence of the risks of financialisation of housing and real estates and land all over the capitalist world. Housing and real estate markets worldwide have been transformed by global capital markets and financial assets. Known as the financialization of housing, the phenomenon occurs when housing is treated as a commodity and a financial asset—a vehicle for wealth and investment—rather than a social good. With roots in the 2008 financial crisis, the impact of the shift from housing as a place to build a home to housing as an investment has been devastating. This includes millions of evictions as a result of foreclosures in countries most affected by the Global Economic Crisis.

Several facts featuring the financialisation of housing, rental and real estate markets: the link between the support of homeownership, mortgage debt and securitization, which has been one of the causes of the global financial crisis; the  liberalization  and financialization  of rental markets; the dismissal of public housing, financialization of housing companies, and recent emergence of financialized forms of social rented and affordable housing; recent reforms that have made real estate and housing markets  increasingly  attractive  to  financial  investments;  fast-growing  concentration  of  housing ownership, and penetration of institutional investors and specialized companies (including so-called ‘vulture funds’) through the purchase of massive housing stocks. The authors need to adress the negative consequences of financialisation of real estate for the stability of these markets and all productive economy.

3.     Lines 121-135: The methodological note contained in this paragraph is very dense and cuts through the reasoning of the introduction by going into too much detail. We suggest moving this content to the methodological section.

4.     Line 195: “In 2015 and the first half of 2016, the central government introduced a series of housing policies to stimulate the housing market”. Can the authors give 5 or 6 examples of measures besides the one in lines 196 and 197?

5.     Some excerpts from the paper need to be more theoretically sustained and coherent or better explained. Authors very often limit themselves to describing the results in a rigorous and objective way, but the analysis and interpretation component is very often absent. Therefore, in addition to describing and referring to the results achieved, it is necessary to explain and interpret them in the light of theoretical assumptions, like perfectly done in lines 438-439, and like 531-538, or 564-573, or 667-673.

Lines 426 and 427: “This positive effect is more significant and larger on multi-home households than on single-home households”

Lines 442, 443…: “The results in columns (5) - (6) of Table 6 show that curbing housing speculation significantly promotes the entrepreneurial activities of both households with and without entrepreneurial experiences. This positive effect is more significant and larger on households with previous entrepreneurship experiences”.

Lines 456 to 459: “The results in columns (1) - (3) of Table 7 show that the entrepreneurial choice of households in the risk preference group is significantly positively affected by the policy to curb housing speculation, while the entrepreneurial choice of households in the other two groups is not significantly affected.”

Lines 463 to 466: “The results in columns (4) - (6) of Table 7 show that the entrepreneurial choice of high-asset households is significantly positively affected by the policy to curb housing speculation, while the entrepreneurial choice of medium-asset and low-asset households is not significantly affected.

Lines 501 to 503: These results rule out the channel that the positive effect of curbing speculation on household entrepreneurship may be driven by affecting the housing wealth of households.”

 

Final assessment

The paper presents an important contribution to real estate studies, presenting a very good empirical demonstration of results and being drafted clearly and objectively. Also reveals a good scientific terminology and vocabulary in the study of housing market and real estate dynamics.

Despite the requested changes, the authors should understand that his/her paper is very good and just sometimes what it takes is to add a small paragraph or phrase on the subjects required, or even change or replace a reference, to significantly improve the work. In short, in spite of the considerations outlined in the field of specific assessment, this review is in favor of publishing the manuscript but with minor modifications, with the expectation that this will surely be an important contribution to the academic and political debates surrounding the housing economy studies.

Comments on the Quality of English Language

 

Minor editing of English language required

Author Response

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Author Response File: Author Response.pdf

Reviewer 2 Report

Comments and Suggestions for Authors

The research addressed an original research problem from an international perspective relating to the impact of discouraging housing speculation on household entrepreneurship in China. The main contribution of this article is to increase knowledge of the economic effects of housing market regulation policies, especially deliberate restrictions on home purchases in China.  The authors have contributed to filling the gap in the link between home purchase organics and household entrepreneurship by showing that the positive impact of HPR on household entrepreneurship contributes to the knowledge of the stimulating effect of speculative housing market interventions on the Chinese economy. Furthermore, empirical evidence of a speculative channel between the relationship between housing and household entrepreneurship is provided. . Using the quasi-natural example of house purchase restrictions, it is further concluded that the article provides credible empirical evidence that housing speculation crowds out household entrepreneurship.  The article further enriches knowledge on the negative economic consequences of housing speculation. The research identifies a strong positive effect of home purchase restrictions on household entrepreneurship.  An original multi-level research methodology based on triangulation of several specific methods, including a quasi-natural experiment involving house purchase restrictions in China, was adopted to achieve the research objective.

To improve the reception and value of the work from an international reader's perspective, the following corrections and additions to the text are recommended;

1) it would be very desirable to present more clearly for the international reader the research problem undertaken, including in particular the understanding of the concept of household entrepreneurship; 

2) clarify the sense of the restrictions on home ownership, which are unclear because in most European and American countries based on market economies and individual freedom, such restrictions are eliminated rather than introduced; in other words, such restrictions in these countries constitute an attack on economic freedom and civil liberty; an extended explanation of this issue would be much needed; 

3) moreover, the relationship of the research carried out to the concept of sustainability should be explained in more detail; the aim is to justify the publication of the article in the journal Sustainability;

4) the text is very long and the main conclusion is repeated many times like a kind of incantation; it would be advisable to shorten the whole text, giving the course and results of the research in a more synthesized form, which would be less tedious for potential readers;

5) the conclusions should stress the usefulness of the research project; it should emphasize what new values the research brings to other countries in the world; this is necessary if we want to publish the article in a journal of international scope with an Impact Factor  

After these clarifications and corrections, I recommend the article for publication in Sustainability.l

 

Author Response

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Author Response File: Author Response.pdf

Reviewer 3 Report

Comments and Suggestions for Authors

The article presents research related to limiting housing speculation by household entrepreneurship in China. The paper highlights the constraints associated with local households' home purchases. The study also pays attention to housing prices, mortgage debts or household preferences for housing investment.

The introduction on state intervention in the functioning of the real estate market may be of interest to the reader. It has been proposed for 45 cities in China (2010) to put restrictions on the number of homes a household can purchase - HPR.

It seems that the scientific soundness of the article can be established. The authors used data from - China Household Finance Survey (CHFS) - and analyzed the variability in property purchase restrictions at the city level. In addition, they used a variety of research methods, such as instrumental variable (IV) estimators and Difference-in-Differences (DID), which examines the variability in existing real estate intervention in a good way.

In general, the research was carried out correctly, one can only wonder whether the introduction of the HPR restrictions indicated earlier, really affects the probability of increasing the intensity of entrepreneurial activity in households. Of course, according to the principles of mathematics, such results may be acceptable, however, as the world shows, the impact on the growth of entrepreneurship in societies depends on a great many factors, and the one indicated by the authors may influence but may also be one of many global economic market trends.

The article is quite extensive mostly focuses on empirical studies Therefore, you can be forgiven for only 40 items in the literature on the topic 

 

 

Author Response

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Author Response File: Author Response.pdf

Reviewer 4 Report

Comments and Suggestions for Authors

Dear/s Author/s,

Re: Manuscript “The impact of curbing housing speculation on household entrepreneurship in China”

Reviewer’s report:

The objective of the study is very interesting, since it is about analyzing aspects as beneficial for society as entrepreneurship and innovation, at the cost of reducing or eliminating the detrimental effects of real estate speculation. The paper is well well written and the results are interesting, although it would be to improve its structure for the benefit of readers, as will be discussed in the course of this review. Proof of this, is that in the abstract the four basic points are not set out in an orderly manner: objective, importance and necessity of the and importance and necessity of the subject, methodology, of which nothing is said, results and conclusions.

The research gap is well highlighted, but reference is only made to the case of China. It needs to be explained in the introduction and literature review with a bit more of a global perspective. Does this problem exist elsewhere in the world or not? The methodology used has been explained to some extent, but has not been justified, as well as the period of study. In the conclusions for the benefit of the readers, all the theoretical and practical implications, limitations and future lines of research should be systematically stated. The bibliography is not up to date, as there are no references for the year 2022 or 2023, for an article that can be published in the year 2024.

Best regards

Author Response

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Author Response File: Author Response.pdf

Round 2

Reviewer 4 Report

Comments and Suggestions for Authors Dear/s Author/s,

The authors have exceeded all the requirements made.

Best Regards.