Housing reform and private housing choice behavior in China

China has experienced many changes since 1979 when the country embarked on a major economic reform. As one of the largest welfare sector, housing is the most important part of the economic restructuring process. After twenty years of experience, the welfare housing system has been changed and a new market-oriented housing system is growing. Along with these developments, a private housing market is now emerging in urban China. Using Xiamen as a case study, this paper aims to identify the consumersí choice behavior in the private housing market. By looking at the consumersí perspective through the use of principal component analysis, we find three factors, namely, ìPhysicalî; ìLiving Environmentî; ìAmenities and Financial Benefitsî best represent the image structure of the element of the private housing market in Xiamen, China. By adopting the discrete choice model, the nested logit model is found better than the multinomial logit model to fit the data. The analysis shows that the factors ìPhysicalî and ìAmenities and Financial Benefitsî have a stronger relationship with the choice than ìLiving Environmentî. Further analysis shows that Education Level is the most significant socioeconomic characteristic which influences respondentsí choice. People with lower Education Level consider that ìLiving Environmentî is the most important factor in the choice of private housing while to those with higher Education Level, ìPhysicalî is the first.