Unpacking the housing cost-income gap in transitional China

Abstract

There is a growing research literature which focuses on inequality in Chinese cities, and in particular on housing inequality. These studies point to the gap between incomes and house costs but unlike the US and Europe where home ownership has declined especially for young adults, the same is less true in China. How can we understand continuing high levels of ownership in China when the gap between incomes and housing costs is so large and housing affordability is now as common in cities in China as it is in European and North American cities? The paper explores the income housing cost disconnect nationally and in the very large “superstar” cities of China. Previous studies of inequality and the role of housing affordability have documented the nature of affordability and inequality. We extend that research by using individual data from the China Household Finance Survey to unpack the nature of housing outcomes across categories of income and house value as a measure of housing costs. The paper analyzes who owns, and how it varies across categories of income and housing value. Our analysis shows that there are strong relationships between education, employment, and position in the housing market. We also confirm that parental inputs, the structural role of hukou status, and access to the housing provident fund continue to play important roles in the gaps between incomes and housing values. The research documents these relationships at the national level and across the Chinese “superstar” cities.