An Investigation of Housing Affordability In China

Housing affordability distinguishes ‘need’ and ‘access’ as the key criteria to examine the ability of the households to enter the housing market or transit into homeownership. The term ‘housing affordability’ is a common terminology in describing housing difficulties, which was broadly considered as the relationship between house price and income. Besides, housing affordability examines the ability of households paying for a house without squeezing current daily expenses or falling into poverty. The expansion of the Chinese residential housing market has been accompanied with house price appreciation in recent 10 years, such change has led housing difficulties to low income groups. This research examines the main factors which would impact housing affordability in China. The secondary cross-section data which contains data on household income, financial status, demographic factors and life cycle status are employed to investigate the magnitudes of housing affordability in Micro level. Furthermore, the impact factors of housing affordability will be examined empirically regarding the locational and income differences. Recent research on housing affordability has shifted from estimating affordability indices to policy debates of granting housing and social welfare subsidies. With respect to the results, this research will propose further policy measures to evaluate the efficiency of the housing policy in China.