One decade of urban housing reform in China: Urban housing price dynamics and the role of migration and urbanization, 1995–2005

Abstract

This paper explores the possible effects of rural–urban migration and urbanization on China’s urban housing prices through focusing on a critical decade in urban housing reform, from 1995 to 2005. Compared with other countries, China differs, to a certain extent, in migration and urbanization patterns due to its unique Household Registration System ( Hukou) and huge population base. However, very few empirical housing studies have examined the role of rapid urbanization and massive rural–urban migration in affecting housing price dynamics in China. This paper analyses the changes over time in housing prices in each Chinese province and examines empirically the determinants of urban house price at national and regional levels using time-series and cross-sectional data. The study finds that the abolition of the policy on the provision of welfare housing in 1998 is an important milestone in Chinese urban housing reform, which resulted in the market-oriented urban housing provision system. When comparing the results from coastal and inland provincial analyses, it is found that coastal provinces encountered greater pressure and challenges in dealing with the accommodation of migrants who were mainly from inland provinces. In contrast, inland provinces have relatively less pressure from migrants. The results from this paper are also in agreement with the hypothesis that regional variations in the urbanization level would have impact on the price of sold commodity houses. The results from this microlevel analysis of housing price may inform the Chinese policy makers to re-evaluate China’s urban housing reform policies from the perspective of facilitating labor migration and urbanization.