The receding housing ladder: house price inflation, parental support, and the intergenerational distribution of housing wealth in China

Abstract

ABSTRACT China has experienced very rapid house price inflation in recent years – by some 10% per annum relative to consumer price inflation. Existing house-owners have benefited from capital gain and have been able to climb the housing ladder. Young household heads – wanting to own a house and facing rising house prices relative to their incomes – have found it increasingly difficult to get onto the housing ladder. However, their difficulty is eased by the strength of family support and the developing market for housing loans. The China Household Income Project (CHIP) surveys of 2002 and 2013 are analysed to test the hypothesis that the age distributions of house ownership and of housing wealth have moved against the young. Probits, tobits, and difference-in-difference analyses measure these effects. There is indeed evidence indicating a receding housing ladder, and evidence that waiting longer to own a house is positively associated with house price inflation.