The Impact of Housing Prices on Regional Innovation Capacity: Evidence from China

Enhancing regional innovation capacity has become a realistic need to promote high-quality economic development. At present, there is no consensus on how housing prices affect regional innovation capacity. Papers in the existing literature frequently regard regional innovation capacity as a “black box”. Little consideration has been given to the internal processes of this black box as well as to the mechanisms of housing prices affecting regional innovation capacity. In order to crack this black box, regional innovation can be divided into three stages: innovation input, innovation output, and innovation achievement transformation based on innovation value-chain theory. In this paper, an analytical framework of housing prices affecting regional innovation capacity was constructed using the relevant theories. An empirical test was conducted using Chinese provincial panel data from 2004 to 2019. It was found that housing prices have negative impacts on innovation input, innovation output, and innovation achievement transformation capacity. These three impact paths are influenced by the three mechanisms of real-estate investment, human-capital level, and regional consumption capacity, and the impacts are heterogeneous among different regions in China. These findings contribute to our understanding of the relationship between housing prices and regional innovation capacity and provide useful references for enhancing regional innovation capacity.