Social Capital and Housing Affordability: Evidence from China

Abstract

The problem of housing affordability is not only of considerable importance for governments to make housing policies, and is but also often the focus of academic research of housing markets. This paper therefore attempts to examine the affordability problem in China based on a set of household-level survey data. In particular, our study focuses on the important implication of social capital for households’ house purchasing decisions. Our results show that household expenditures on relations with parents and other relatives are important determinants for homeownership in China. We also find evidence that house purchasing decisions are significantly affected by relatives-related variables such as the number of immediate relatives in the same city, distance from parents, educational years of household head’s father, and whether parents are alive. Our research helps to shed new light on the relatively high homeownership rate in urban China.