Economic Development Quality,Real Estate Cycle and the Evolution of Household Leverage

GU Yongkun; LUO Cheng; YIN Haibo

doi:10.16219/j.cnki.szxbzk.2025.02.013

Abstract：This paper conducts theoretical and empirical research on the evolution mechanisms and paths through which the quality of economic development influences the real estate cycle and household leverage.Theoretical analysis shows that the interaction between real estate prices and household debt drives the formation of real estate cycles,while the quality of economic development further shapes the evolution paths of real estate cycles and household leverage by affecting the stability and sustainability of real estate price trends.Empirical studies find differences in the evolution paths of real estate cycles between the United States and Japan:the long-term real estate price trend in the U.S.is stable with sustained price increases,while Japan"s long-term price trend has a turning point,leading to the contraction of household balance sheets.The quality of economic development is an important cause of these two paths.The high quality development of China"s economy has laid a solid foundation for the stability and sustainability of the long-term trend of real estate prices,but short-term price declines and financial risks of highly leveraged households deserve attention.The research shows that there are different paths for the evolution of real estate cycles and household leverage,and improving the quality of economic development and maintaining the stability and sustainability of long-term real estate prices are effective ways to avoid household balance sheet recessions.