IDEAS home Printed from https://ideas.repec.org/a/eee/jhouse/v33y2016icp4-14.html
   My bibliography  Save this article

Housing affordability and housing vacancy in China: The role of income inequality

Author

Listed:
  • Zhang, Chuanchuan
  • Jia, Shen
  • Yang, Rudai

Abstract

China's urban housing price has dramatically increased in the past decade, surpassing income growth and raising fears of a real estate bubble. The increase in housing price is also accompanied by a growing number of vacant apartments. This paper argues that income inequality is one important factor driving up both the housing price relative to income and the housing vacancy rate. Using data from China's Urban Household Survey, the paper empirically examines the effects of income inequality on the housing price-to-income ratio and housing vacancy rate within each city. We find that the income GINI coefficient is positively related to the housing price-to-income ratio as well as the housing vacancy rate. In particular, a one percentage higher GINI coefficient is associated with increases in the housing price-to-income ratio and housing vacancy rate of 0.026 points and 0.166 percentage points, respectively. During 2002 and 2009, approximately 6% of the increase in the housing price-to-income ratio and 10% of the increase in the housing vacancy rate can be attributed to the increase of the GINI coefficient. Further studies show that the development of the capital market and housing rental market are somewhat helpful in mitigating the associations between income inequality and the housing price-to-income ratio and vacancy rate.

Suggested Citation

  • Zhang, Chuanchuan & Jia, Shen & Yang, Rudai, 2016. "Housing affordability and housing vacancy in China: The role of income inequality," Journal of Housing Economics, Elsevier, vol. 33(C), pages 4-14.
    • Handle: RePEc:eee:jhouse:v:33:y:2016:i:c:p:4-14
    DOI: 10.1016/j.jhe.2016.05.005
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1051137716301085
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jhe.2016.05.005?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Carlos Garriga & Aaron Hedlund & Yang Tang & Ping Wang, 2023. "Rural-Urban Migration, Structural Transformation, and Housing Markets in China," American Economic Journal: Macroeconomics, American Economic Association, vol. 15(2), pages 413-440, April.
    2. Margaret Hwang Smith & Gary Smith, 2006. "Bubble, Bubble, Where's the Housing Bubble?," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 37(1), pages 1-68.
    3. Cowell, Frank, 2011. "Measuring Inequality," OUP Catalogue, Oxford University Press, edition 3, number 9780199594047.
    4. John M. Quigley & Steven Raphael & Eugene Smolensky, 2001. "Homeless In America, Homeless In California," The Review of Economics and Statistics, MIT Press, vol. 83(1), pages 37-51, February.
    5. Shang-Jin Wei & Xiaobo Zhang & Yin Liu, 2012. "Status Competition and Housing Prices," NBER Working Papers 18000, National Bureau of Economic Research, Inc.
    6. Matlack, Janna L. & Vigdor, Jacob L., 2008. "Do rising tides lift all prices? Income inequality and housing affordability," Journal of Housing Economics, Elsevier, vol. 17(3), pages 212-224, September.
    7. Nathalie Girouard & Mike Kennedy & Paul van den Noord & Christophe André, 2006. "Recent House Price Developments: The Role of Fundamentals," OECD Economics Department Working Papers 475, OECD Publishing.
    8. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
    9. repec:wyi:journl:002165 is not listed on IDEAS
    10. Renaud, B., 1991. "Housing reform in socialist economies," World Bank - Discussion Papers 125, World Bank.
    11. Meng, Xin & Shen, Kailing & Xue, Sen, 2013. "Economic reform, education expansion, and earnings inequality for urban males in China, 1988–2009," Journal of Comparative Economics, Elsevier, vol. 41(1), pages 227-244.
    12. John M. Quigley & Steven Raphael, 2004. "Is Housing Unaffordable? Why Isn't It More Affordable?," Journal of Economic Perspectives, American Economic Association, vol. 18(1), pages 191-214, Winter.
    13. Hongbin Li & Xinzheng Shi & Binzhen Wu, 2015. "The Retirement Consumption Puzzle in China," American Economic Review, American Economic Association, vol. 105(5), pages 437-441, May.
    14. Arellano, Manuel & Bover, Olympia, 1995. "Another look at the instrumental variable estimation of error-components models," Journal of Econometrics, Elsevier, vol. 68(1), pages 29-51, July.
    15. Charles R. Plott & Kathryn Zeiler, 2005. "The Willingness to Pay–Willingness to Accept Gap, the "Endowment Effect," Subject Misconceptions, and Experimental Procedures for Eliciting Valuations," American Economic Review, American Economic Association, vol. 95(3), pages 530-545, June.
    16. Hongbin Li & Lei Li & Binzhen Wu & Yanyan Xiong, 2012. "The End of Cheap Chinese Labor," Journal of Economic Perspectives, American Economic Association, vol. 26(4), pages 57-74, Fall.
    17. John D. Hey & Peter J. Lambert, 1980. "Relative Deprivation and the Gini Coefficient: Comment," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 95(3), pages 567-573.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jorge Rojas-Vallejos & Stephen J. Turnovsky, 2021. "Differential Tariffs and Income Inequality in the United States: Some Evidence from the States," Open Economies Review, Springer, vol. 32(1), pages 1-35, February.
    2. Jakub Bartak & Łukasz Jabłoński, 2020. "Inequality and growth: What comes from the different inequality measures?," Bulletin of Economic Research, Wiley Blackwell, vol. 72(2), pages 185-212, April.
    3. Elias Oikarinen, 2008. "Empirical application of the housing-market no-arbitrage condition: problems, solutions and a Finnish case study," Discussion Papers 39, Aboa Centre for Economics.
    4. Wei Qian & Yongsheng Wang, 2022. "How Do Rising Labor Costs Affect Green Total Factor Productivity? Based on the Industrial Intelligence Perspective," Sustainability, MDPI, vol. 14(20), pages 1-19, October.
    5. Zhang, Chuanchuan, 2015. "Income inequality and access to housing: Evidence from China," China Economic Review, Elsevier, vol. 36(C), pages 261-271.
    6. Daniel Ştefan Armeanu & Georgeta Vintilă & Ştefan Cristian Gherghina, 2017. "Empirical Study towards the Drivers of Sustainable Economic Growth in EU-28 Countries," Sustainability, MDPI, vol. 10(1), pages 1-22, December.
    7. Youngho Kang & Byung-Yeon Kim, 2018. "Immigration and economic growth: do origin and destination matter?," Applied Economics, Taylor & Francis Journals, vol. 50(46), pages 4968-4984, October.
    8. Vieira, Flávio & MacDonald, Ronald & Damasceno, Aderbal, 2012. "The role of institutions in cross-section income and panel data growth models: A deeper investigation on the weakness and proliferation of instruments," Journal of Comparative Economics, Elsevier, vol. 40(1), pages 127-140.
    9. Kitazawa, Yoshitsugu, 2001. "Exponential regression of dynamic panel data models," Economics Letters, Elsevier, vol. 73(1), pages 7-13, October.
    10. Alessandra Canepa & Fawaz Khaled, 2018. "Housing, Housing Finance and Credit Risk," IJFS, MDPI, vol. 6(2), pages 1-23, May.
    11. Raushan Bokusheva & Lukáš Čechura & Subal C. Kumbhakar, 2023. "Estimating persistent and transient technical efficiency and their determinants in the presence of heterogeneity and endogeneity," Journal of Agricultural Economics, Wiley Blackwell, vol. 74(2), pages 450-472, June.
    12. Efobi, Uchenna & Asongu, Simplice & Okafor, Chinelo & Tchamyou, Vanessa & Tanankem, Belmondo, 2016. "Diaspora Remittance Inflow, Financial Development and the Industrialisation of Africa," MPRA Paper 76121, University Library of Munich, Germany.
    13. Simplice A. Asongu & Joseph I. Uduji & Elda N. Okolo‐Obasi, 2020. "Drivers and Persistence of Death in Conflicts: Global Evidence," World Affairs, John Wiley & Sons, vol. 183(4), pages 389-429, December.
    14. Eschenhof, Sabine, 2009. "Standard Taylor rules revisited: A cross country study for European countries," Darmstadt Discussion Papers in Economics 196, Darmstadt University of Technology, Department of Law and Economics.
    15. Huy Quang Doan, 2019. "Trade, Institutional Quality and Income: Empirical Evidence for Sub-Saharan Africa," Economies, MDPI, vol. 7(2), pages 1-23, May.
    16. Kjetil Bjorvatn & Mohammad Reza Farzanegan, 2014. "Resource Rents, Power, and Political Stability," CESifo Working Paper Series 4727, CESifo.
    17. Basso, Henrique S. & Jimeno, Juan F., 2021. "From secular stagnation to robocalypse? Implications of demographic and technological changes," Journal of Monetary Economics, Elsevier, vol. 117(C), pages 833-847.
    18. Simplice A Asongu, 2013. "On the Obituary of Scientific Knowledge Monopoly," Economics Bulletin, AccessEcon, vol. 33(4), pages 2718-2731.
    19. Marin, Dalia & Fabbri, Francesca, 2012. "What Explains the Rise in CEO Pay in Germany? A Panel Data Analysis for 1977-2009," CEPR Discussion Papers 8879, C.E.P.R. Discussion Papers.
    20. Hartwell, Christopher A., 2014. "The impact of institutional volatility on financial volatility in transition economies : a GARCH family approach," BOFIT Discussion Papers 6/2014, Bank of Finland, Institute for Economies in Transition.

    More about this item

    Keywords

    Income inequality; Housing price-to-income ratio; Housing vacancy rate;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • R21 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Housing Demand
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jhouse:v:33:y:2016:i:c:p:4-14. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/622881 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.