Can low-carbon cities increase urban housing prices? Evidence from China's low-carbon city pilot.

The low-carbon transformation is a broad and profound systemic change that will inevitably impact many areas of the urban environment, economy, and social system. We evaluated the impact of China's ongoing "low-carbon pilot policy" on urban housing prices as a "quasi-natural experiment." Existing research findings and hedonic theory predictions suggest that the low-carbon city pilot (LCCP) policy is increasing urban housing prices through air quality improvements. However, this study contradicts these speculations based on the situation in China. This study employed the analytical framework of staggered difference-in-differences (DID), which revealed that the LCCP policy had generally reduced housing prices; the implementation of the policy had led to an average decrease of 6.2% in housing prices in pilot cities, compared to non-pilot cities. The LCCP policy affected housing prices by influencing both the "demand side" and "supply side" of housing. In terms of the demand side, the policy significantly reduced the level of urban air pollution but did not impact housing prices. Instead, it negatively affected housing prices by lowering labor wages. In terms of the supply side, housing prices were negatively affected, mainly by increasing the cost of emission reduction of real estate enterprises, which impacted the original longstanding housing production process. Additionally, there were significant differences in the impact of the LCCP policy on housing prices in cities across different geographical locations and different tiers of cities. This study suggests important policy insights for achieving stable market housing prices and promoting high-quality urban development in the process of low-carbon transformation.