Housing Affordability and Housing Policy in Urban China

141 Pages·2014·2.69 MB·English

by  Zan Yang

SPRINGER BRIEFS IN ECONOMICS
Zan Yang
Jie Chen
Housing
Affordability and
Housing Policy in
Urban China
SpringerBriefs in Economics
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Zan Yang Jie Chen
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Housing Affordability
and Housing Policy
in Urban China
123
Zan Yang Jie Chen
Department of ConstructionManagement InstituteofRealEstateResearch,Schoolof
InstituteofRealEstate Studies, PublicEconomics and Administration
Tsinghua-HangLungCenter ShanghaiUniversity ofFinance
forRealEstateStudies andEconomics
TsinghuaUniversity Shanghai
Beijing People’s Republic ofChina
People’s Republic ofChina
ISSN 2191-5504 ISSN 2191-5512 (electronic)
ISBN 978-3-642-54043-1 ISBN 978-3-642-54044-8 (eBook)
DOI 10.1007/978-3-642-54044-8
Springer Heidelberg NewYork Dordrecht London
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(cid:2)TheAuthor(s)2014
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Preface
The motivation for writing this book dates back to the Swedish International
Development Cooperation Agency (SIDA) project ‘‘Housing Affordability in
China,’’ in which the authors participated under the leadership of Prof. Bengt
Turner (1947–2007) from 2004 to 2007. The first author was working as an
Assistant Professor at Uppsala University’s Institute for Housing and Urban
Research (IBF) during that period. The second author was a Ph.D. student in
Economics at IBF in the first stage of the SIDA project, and continued to be
actively involved after accepting a faculty position at Fudan University in 2006.
Prof. Turner, IBF’s founding director and the founding chairman of the European
Network of Housing Research (ENHR), launched the project with his keen
concerns regarding housing-related welfare issues inChina. Hismain goal was to
determine how China’s housing affordability conditions had been affected by
the market-oriented housing reform. This book was written to commemorate
Prof. Turner, who dedicated time and energy to inspiring and guiding the authors
to achieve more than they thought possible in this area of research.
In spring 2006, an international seminar on ‘‘Housing Affordability in China,’’
organized by the IBF and the Real Estate Institute of Tsinghua University, was
held at Tsinghua University in Beijing. At this seminar, the authors of this book
presented their initial research findings on housing affordability in urban China.
Subsequently, the authors pursued an investigation into the various aspects of
housing affordability and housing policies in urban China. Between 2006 and
2012,theauthorspublishedanumberofself-containedaffordability-relatedpapers
ininternational,peer-reviewedjournalsincludingUrbanStudies,HousingStudies,
Local Economy, China Economic Review, and Journal of Housing and Building
Environment.Thecloseconnectionsforgedintheirresearchandthecorrelationsin
their findings have prompted them to produce a book that provides an overall
picture of housing affordability and housing policy issues in post-reform urban
China. The authors hope that this book will become a useful reference for indi-
viduals interested in post-reform housing developments in China.
On a broad scale, this book engages in the academic debates on the economic
reforms and social transformations occurring in transitional and developing
countries.Itperceiveshousingpolicyreformsaspartofalargershiftfromcentral
planning to a market economy. First, it considers how to depict the changing
family-market-state relationship in the housing sector of a transitional economy
v
vi Preface
such as that of China, particularly how the affordability crisis has been produced
and relieved by governmental housing policy. To address these questions, the
researchers incorporate analytical tools from economics and political science.
Second,thisbookreflectstheauthors’effortstocloselyexaminethesocialeffects
of market reforms, especially with respect to the segments of the population that
are economically disadvantaged and frequently ‘‘left behind.’’ Third, this book is
built on previous studies of housing affordability issues in Western economies in
addition to the literature on housing reforms as it stands in Russia and Eastern
Europe. The massive body of literature on these topics helps to provide a useful
comparative framework and theoretical insights to apply in the Chinese context.
Finally, this book enters the academic debate on cross-regional variations in
China—both withregardtothe functioningofmarket reforms and thedifferences
in local governmental capacity to effectively govern the market environment.
Acknowledgments
The authors would like to thank the financial support of the National Science
FoundationofChina(NSF71073090,NSF71173045),theNationalSocialScience
Foundation of China (09&ZD042), Key Social-Science Research Project of the
MinistryofEducationofthePeople’sRepublicofChina(13JZD009).Theauthors
also gratefully acknowledge the following Master’s students at Institute of Real
Estate studies of Tsinghua university for their supports and assistances in pro-
ducing this book: Cheung Hiu Ying, Dantong Zhou, Huan Zhang, Huaipan Zhen,
Liqing Zhao, Wei Zhang, and Yanhao Shen.
vii
Contents
1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Institutional Background. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Macro Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.3 Polarisation of the Housing Market . . . . . . . . . . . . . . . . . . . . . 6
1.4 Rising Affordability Crisis . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
1.5 Government’s Response to Affordability Crisis. . . . . . . . . . . . . 9
1.6 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2 Housing Reform and the Housing Market in Urban China . . . . . . 15
2.1 Housing System in the Pre-reform Era: 1949–1978. . . . . . . . . . 15
2.2 Housing Reform in Urban China: 1978–1998. . . . . . . . . . . . . . 20
2.3 Housing Development in the Post-reform Era. . . . . . . . . . . . . . 23
2.3.1 Land Use Rights Reform. . . . . . . . . . . . . . . . . . . . . . . 26
2.3.2 Housing Market Regulations Between 2005 and 2006. . . 28
2.3.3 Central Government Measures for an Overheated
Property Market Since 2008. . . . . . . . . . . . . . . . . . . . . 30
2.4 Growing Housing Inequality in Urban China Since 1998. . . . . . 31
2.5 Regional Housing Market in China . . . . . . . . . . . . . . . . . . . . . 33
2.6 Housing Finance System in Urban China. . . . . . . . . . . . . . . . . 36
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
3 Theoretical Background: Affordability and Its Measurement. . . . . 45
3.1 Concept of Housing Affordability . . . . . . . . . . . . . . . . . . . . . . 45
3.2 The Measure of Housing Affordability. . . . . . . . . . . . . . . . . . . 47
3.2.1 Price-or Expenditure-to-Income Ratio Approach. . . . . . . 47
3.2.2 Dynamic Approach. . . . . . . . . . . . . . . . . . . . . . . . . . . 49
3.2.3 Residual Income Approach . . . . . . . . . . . . . . . . . . . . . 50
3.2.4 Accessibility to Public Services . . . . . . . . . . . . . . . . . . 52
3.2.5 Other Affordability Measures. . . . . . . . . . . . . . . . . . . . 54
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
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x Contents
4 Housing Affordability in Urban China: National Study. . . . . . . . . 59
4.1 Methodology and Data Source . . . . . . . . . . . . . . . . . . . . . . . . 59
4.2 Accessibility to Housing via Savings. . . . . . . . . . . . . . . . . . . . 60
4.3 Accessibility to Housing via Mortgage. . . . . . . . . . . . . . . . . . . 62
4.4 The Time-Varying ‘‘Burden’’ of Housing Expenditure. . . . . . . . 65
4.5 Housing-Induced Poverty and Maximum Affordable Price . . . . . 67
4.6 Summary and Policy Implication. . . . . . . . . . . . . . . . . . . . . . . 71
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
5 Housing Affordability in Urban China: Regional Study. . . . . . . . . 73
5.1 General Overview on Regional Disparity in Housing
Affordability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
5.2 Housing Affordability in Beijing. . . . . . . . . . . . . . . . . . . . . . . 75
5.2.1 The Development of the Housing Market in Beijing. . . . 75
5.2.2 Housing Affordability in Beijing: Assessment
Based on Household Survey Data. . . . . . . . . . . . . . . . . 78
5.3 Summary and Policy Implications. . . . . . . . . . . . . . . . . . . . . . 84
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
6 Effects of Housing Policy on Affordability. . . . . . . . . . . . . . . . . . . 87
6.1 The Role of Housing Policy . . . . . . . . . . . . . . . . . . . . . . . . . . 87
6.2 China’s New Public Housing System. . . . . . . . . . . . . . . . . . . . 90
6.2.1 Economic and Comfortable Housing. . . . . . . . . . . . . . . 92
6.2.2 Capped-Price Housing. . . . . . . . . . . . . . . . . . . . . . . . . 93
6.2.3 Low Rental Housing. . . . . . . . . . . . . . . . . . . . . . . . . . 95
6.2.4 Public Rental Housing. . . . . . . . . . . . . . . . . . . . . . . . . 97
6.3 Structure of Public Housing Provision . . . . . . . . . . . . . . . . . . . 100
6.4 Assessing Public Housing’s Impacts on Affordability
in China. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
6.4.1 Methodology and Data . . . . . . . . . . . . . . . . . . . . . . . . 102
6.4.2 Affordability of Public Housing . . . . . . . . . . . . . . . . . . 104
6.4.3 Accessibility of Public Housing . . . . . . . . . . . . . . . . . . 106
6.5 Conclusions and Policy Suggestions . . . . . . . . . . . . . . . . . . . . 109
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
7 Financing Affordable Housing Through Compulsory Savings . . . . 111
7.1 The Evolution of the Housing Provident Fund in China. . . . . . . 112
7.2 The Current State of the Housing Provident Fund in China . . . . 113
7.3 The Effects of the Housing Provident Fund on Improving
Affordability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119
7.3.1 Effectiveness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120
7.3.2 Efficiency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120
7.3.3 Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 123
Contents xi
7.3.4 Sustainability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 124
7.4 Conclusions and Policy Suggestions . . . . . . . . . . . . . . . . . . . . 124
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 127
8 Conclusion. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 129
8.1 The Affordability Problem: How Big is it, and
Who are the Most Vulnerable? . . . . . . . . . . . . . . . . . . . . . . . . 130
8.2 Housing Policy: What Have Been Done, and What More
can be Done? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131
8.3 Perspectives on the Future . . . . . . . . . . . . . . . . . . . . . . . . . . . 132
References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 134