The Impact of the Hukou System overhaul on Housing Prices in China

The hukou system overhaul started in 2014 has reduced barriers to household mobility in China. The overhaul has increased labor mobility from rural to urban areas and across cities, which results in differential impacts on different cities' urban housing prices (""housing prices""). The differences in the urban population control and talent attraction policies in different cities amplify the differential impact. This study investigates the impact of policy implementation in different cities on housing prices. In particular, the study aims to examine the differential impacts on housing prices in mega and non-mega cities. The former has stringent control on the urban population even after the overhaul, while the barriers to household mobility in the latter are significantly reduced. The household movement after the overhaul is also affected by competition for talent in cities. The study conjectures that the hukou system overhaul has positive housing prices due to the growth in the urban population in the urban area. The effect is expected to be faster and stronger in mega cities despite the stringent control in these cities due to more job and business opportunities and the ability of these cities to attract high-income and wealthy households. For the non-mega cities, the impact of the strategy on housing prices is expected to be weaker than those in mega cities since these non-mega cities are less attractive in terms of job and business opportunities. The effects of the hukou system overhaul in these cities are primarily the result of rural-to-urban migration. Therefore, within non-mage cities, an increase in housing demand is anticipated to result from rural-to-urban migration. The impact of these migration on housing prices is likely to be much bigger in mega-cities due to their stringent control of the urban population and the policy of attracting high-income and wealthy talents, most of which are from urban areas in other cities rather than from rural areas.