Relationship between Housing Affordability and Economic Development in Mainland China—Case of Shanghai

Abstract

The transformation of the planned housing provision as an in-kind welfare benefit to a market-oriented housing allocation system is the ultimate goal of the urban housing reform in China. The main concern of the housing reform is to regulate the relationship between the state, market, work units, and individuals. Housing has always been a major problem in Shanghai. The rate of new housing construction has lagged far behind the rate of population growth. In the market reform process, the state has been reducing its role in housing provision which has resulted in significant increases in house prices as well as demand for housing at an affordable level. There is a gap between housing price and affordability. This paper examines the different measures of urban housing reform toward housing affordability in relation to the different stages of economic development in Shanghai during the periods from the 1980s to now. It emphasizes the rent policy and the “provident fund for housing”—A housing saving scheme. The prime intent of this paper is to investigate Shanghai’s housing policy under the urban housing reform toward affordability, at various stages of economic development. The paper attempts to ascertain what lessons can be learned to assist the provision of affordable housing in major cities in Mainland China.