Dissecting the myth of the house price in Chinese metropolises: allowing for behavioral heterogeneity among investors

  • Ling Zhang
  • Wenlong Bian
  • Hao ZhangEmail author
Regular Article


This paper aims to demystify the housing boom in Chinese metropolises by allowing for behavioral heterogeneity among investors. We construct an agent-based model where investors are categorized into two groups: fundamentalists and chartists. In addition, the investment strategy switching is allowed between these two groups contingent on the historical performance. Using the data of five Chinese metropolises over the period 2008–2014, the results suggest that chartists dominate the housing market and make the house price maintain an upward trend, while fundamentalists play a stabilizing role. Specifically, fundamentalists can serve as a “price anchor” in the market, because the proportion of the fundamentalists is negatively associated with both the growth rate of the house price and the deviation relative to the fundamental value. Overall, the impact of the chartists on the house price is much greater than that of the fundamentalists, which contributes to the ever-increasing house price in Chinese metropolises.


Behavioral heterogeneity House price Investment strategy switching 



This research is supported by the National Natural Science Foundation of China (Nos. 71603061, 71601055, 71721001, 71971070), the Philosophy and Social Science Programming Foundation of Guangzhou (Project No. 2018GZYB56), and the Fund Projects of Guangdong University of Foreign Studies and the Foundation of South China Institute of Fortune Management Research.


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© Springer-Verlag GmbH Germany, part of Springer Nature 2019

Authors and Affiliations

  1. 1.Center for Financial Engineering and Risk Management, School of InsuranceGuangdong University of FinanceGuangzhouPeople’s Republic of China
  2. 2.Graduate School of ChinaSungkyunkwan UniversitySeoulRepublic of Korea
  3. 3.School of FinanceGuangdong University of Foreign StudiesGuangzhouPeople’s Republic of China
  4. 4.Southern China Institute of Fortune Management ResearchGuangzhouPeople’s Republic of China

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