The Effect of Housing Prices on Urban Innovation Capability: New Evidence From 246 Chinese Cities

ABSTRACT This study investigates the impact of rising housing prices on urban innovation capabilities from a comprehensive and systemic perspective, using panel data from 246 Chinese cities from 2004 to 2020. The findings challenge traditional views that emphasize only the negative effects of high housing prices on innovation. Instead, the analysis reveals that rising housing prices can enhance urban innovation through specific mechanisms. These include attracting and concentrating talent and generating spatial spillover effects that benefit neighboring cities. The study employs feasible methodological approaches, including the analytic hierarchy process (AHP), to measure urban innovation capability and spatial econometric models to capture spillover effects. The results provide valuable insights for policymakers to promote urban innovation, including stabilizing housing markets, optimizing industrial structures, attracting high‐skilled individuals, and establishing inter‐city innovation coordination mechanisms. This research contributes a novel theoretical framework for understanding the complex relationship between housing prices and urban innovation, enriching the fields of urban economics and innovation studies.