State Owned Enterprises in China's Housing Boom: A Case Study of Chengdu, Sichuan

Abstract

China’s property market has been the subject of much media coverage in recent years. Rapid price increases for residential property and the possibility of a price bubble in many cities has led the central government to take a myriad of regulatory measures to cool housing markets. Scholarly attention has focused either on inter-city analyses or case studies of the high-GDP coastal cities like Shanghai and Beijing, and too little is known about the property market dynamics of more typical Chinese cities. Moreover, there is a dearth of research on the role of State Owned Enterprises (SOE), which play an important role in China’s housing boom. This paper uses a comprehensive set of georeferenced housing transactions, joined with remote sensing data and data on neighborhood amenities and transportation infrastructure, to analyze the dynamics of the Chengdu housing market from 2004 to 2011 and assess the differences between housing produced by SOE and other types of developers. The observed reduction in variation in housing prices and sizes, as well as a growing premium for larger units can be plausibly connected to new government regulations. We find that units developed by SOE sell at a discount.