Impact Of Land And Housing Market Reform On Low Income Housing Provision In China: The Case Of Beijing And Shanghai

Successive reforms on land use rights, mortgage finance and privatisation of the social housing stock to sitting tenants coupled with large scale housing shortage particularly in urban areas due to in-migration and rapidly rising incomes has led to the massive growth of the private housing market in China. As a result between 1999 and 2006 national housing prices have risen by over 50% and about 2.5 billion square metres of housing developments sold in the open market. Available evidence suggests however that this growth is largely concentrated on higher income groups with a large degree of speculative investment due to the rapidly rising prices. Given the rapid decline of social housing provision an important issue for consideration is the impact on the housing position of lower income groups, particularly new migrants to Chinese cities and their adopted housing strategies. The overall conceptual framework for this work draws on the institutional approach to urban analysis. The institutional approach has gained importance for analysing the diversity of economic formations and urban dynamics in different localities in recent years. Utilising this approach, scholars have researched the development of property and housing markets and policy in both developed and transition and developing economies (Keivani, et al, 2001). This approach is particularly suited for examining low income housing provision in developing countries. From the institutional perspective the key to such an analysis lies in the relationships between the interests, strategies and actions of agents involved and the social, economic and regulatory structures governing their decisions. Thus the research will focus on: the impact of institutional reforms, particularly land rights, on the operation and interaction of the main actors involved in the housing market and low income housing provision. >From a policy perspective the publication of World Bank housing policy paper in 1993 provided a sharp focus on enabling private housing markets and the housing sector. This is based on a series of major institutional reforms and withdrawal of public sector from direct provision to one of eradicating market barriers and facilitating efficient market activity. The Chinese context provides an important case of rapid and wide scale reforms for development of housing markets in a major transition economy. This paper draws on the market enabling paradigm to examine a) the degree to which the Chinese experience has followed enabling market policy strategies, and b) what is the potential of such a paradigm for actually addressing low income housing provision.