Property Tax, Levy Expectations and Housing Asset Allocation: Evidence from Chinese Households

Property tax reform in China has long been discussed regarding the reform agenda. However, nationwide implementation remains stalled, with no clarity regarding when and how property taxes will be levied. Uncertain expectations affect household housing assets, the most important assets of Chinese residents. To explore the impact of property tax levy expectations on the allocation of such assets, we construct a theoretical model and use four waves of China Household Finance Survey and Baidu index data for estimation. Property tax levy expectations significantly reduce the proportion of household housing assets to total assets, especially for high-income groups, nonrural hukou households, young-headed households, and households in first-tier cities. For multi-home households, the absolute housing asset quantity drops even more. Moreover, house purchase intentions mediate the impact of property tax levy expectations on household housing asset allocation. The findings provide new insights into upcoming property tax reform and highlight the need to develop differentiated property tax brackets and rates.