Does China face a housing affordability issue? Evidence from 35 cities in China

Abstract

Purpose -The purpose of this paper is to examine the degree of housing affordability in China's 35 large and medium cities. Furthermore, this paper investigates the relationship between housing affordability and the house prices using data from China's 35 large and medium cities from 1996 to 2007. Design/methodology/approach -This paper constructed the housing affordability index and classified cities in terms of their housing affordability degree. OLS, unit root test and cointegration test have also been used in the empirical test section. Findings -The results exhibit that the housing price has played a more important role in housing affordability than household income. Thereby, decreasing housing price is more important than household income to alleviate the housing affordability problem. Meanwhile, housing size has exerted a great impact on housing affordability. Accordingly, developing more affordable houses is an alternative to mitigate the housing affordability issue in China. In addition, it is also found that the housing reform facilitates the housing affordability issue due to the low sale price of the public houses; the population growth rate and geographic locations have no significant impact on the housing affordability.Research limitations/implications -In terms of the research limitations, the heterogeneity factor may be introduced considering the regional heterogeneity of cities in China. Therefore, researchers are encouraged to test the propositions with enriched datasets. Practical implications -Practical implications are that decision-makers in government should pay close attention to the risk of the housing bubble. That is, the soaring house price was driven by investment instead of by the demand side. Originality/value -This paper contributes to defining the dynamic upper boundary of the percentage of housing expenditure to income ratio via Engel's coefficient using the housing market data of 35 large and medium cities in China from 1996 to 2007.

House price affordability, the global financial crisis and the (ir)relevance of mortgage rates

“…Affordability is complex, it can have many determinants and multiple normative and positive economic meanings. Normatively, individuals and households ought to be able to purchase a certain property (Kuang & Li, 2012), and in a positive economic sense it is where empirical 'facts' illustrate affordability using some statistical technique (Meen & Andrew, 2008). For example, examinations of house price growth reveal spatial and temporal ripple effects at the regional scale, which reminds one that sub-regional scales are of importance when analysing highly aggregated data sets (Meen, 1999).…”

Affordable Housing Performance Indicators for Landed Houses in the Central Region of Malaysia

“…Thus, the term 'affordable housing' describes housing that assists lower income households in obtaining and paying for appropriate housing without experiencing undue financial hardship (Milligan et al, 2004). Zhang (2007) and Zhou et al (2010) employed price-income-ratio (PIR) to indicate the housing affordability where affordability can be defined as a relationship between household income and household expenditure, when the ratio of expenditure to income is reasonable that is the housing affordability (Kuang & Li, 2012).…”

“…The Performance approach is the practice of thinking and working in terms of ends rather than means. BPE contains many issues and criteria, which can be categorized as physical, functional, environmental, financial, economical, psychological and social (Gibson, 1982;Kim et al, 2004;Kuang & Li, 2012).…”

Are They Neck and Neck in the Affordable Housing Policies? A Cross Case Comparison of Three Metropolitan Cities in China

“…Current studies have paid more attention to case studies, which explore the practical experience and lessons of affordable housing programs in various counties and cities [7][8][9][10]. Some studies discuss topics related to the role of federal government in the responsibilities and implementation of affordable housing programs [11].…”

“…Beijing, Tianjin, and Guangzhou are the major cities selected for this comparative study. These three municipalities are significant examples of public policy and administrative reform and are representative of many Asian countries [4,9,17]. In addition, another reason for choosing these cases is the similarity of their economic and demographic features: the cities are major domestic or international immigrant cities with prosperous financial and service industries.…”