Crowding-out effects of affordable and unaffordable housing in China, 1999–2010

Abstract

Using panel data on housing construction, this article examines the crowding-out effects of affordable and unaffordable housing in China from 1999 to 2010. Applying a dynamic panel model allows us to examine the dynamic interactions between affordable and unaffordable housing constructions when controlling for region-specific fixed and time-specific effects. We analyse whether affordable (unaffordable) housing construction has changed in response to the past and contemporaneous construction of unaffordable (affordable) housing. Our empirical results reveal an asymmetric crowding-out pattern between affordable and unaffordable housing. We also observe that when urbanization rate is lower than 57.39%, unaffordable housing construction crowds out affordable housing construction. Moreover, the crowding-out effect of unaffordable housing on affordable housing decreases with rising urbanization rates.