Abstract: This paper explores the impact of rising house prices and household debt on consumption from both theoretical and empirical perspectives.
Theoretically we construct a model respectively considering the impact of rising house prices, Loan to Value(LTV) on household consumption for house owners and renters. Empirical results of micro data from China Family Panel Studies (CFPS) of 2010, 2010 and 2014 show that:(1) The leverage effect of household debt on consumption is remarkable, and the leverage effect is still significant even after controlling the economic development of different provinces and different items of consumption; (2) For house owners, rising house prices will significantly promote the consumption, and its positive wealth effect on household consumption is enhanced after including household debts in the model; While for renters or potential houses buyers, rising housing prices will hamper the consumption. (3) Whatever for house owners or homeless households, the effect of loan-to-value ratio on household consumption has obvious threshold effect, that is, only when the loan-to-value ratio increases to a certain level, its influence on household consumption will change from promotion to inhibition. (4) The effect of rising housing prices on household consumption is significantly different among diverse groups. For urban households with higher education degree or those with more than two houses, the effect of rising housing price on the consumption is stronger.
However, it should be noted that although household debt can fill the gap between expenditure and income, when the amount of household debt level is over large, rigid repayment of larger debt will crowd out household consumption. At that time, the accumulation of household debt will hinder the household consumption.

Key words: rising housing price, household debt, loan to value