The Heterogeneous Impact of House Purchase Limits Policy on Housing Prices: Comparison between Elite and Non-elite School District Houses

The effectiveness of housing purchase limits policieshas aroused heated debate, yet few discussed its impacton educational capitalization. We examine the hetero-geneous effect of housing purchase limits policy onthe price of elite school district houses (ESDH) andnon-elite school district houses. By exploiting second-hand houses data in Hefei China, we find that theprice of ESDH has increased greatly after the limita-tion, compared with non-elite school districts. Furtherwe discover that the ESDH have lower depreciationrisks, and their price is higher in neighborhoods withsmaller dwelling area. Our finding indicates that thelimits policy may have exacerbated the educationalcapitalization.