Heterogeneity and Dynamics in China's Emerging Housing Market

Abstract

China's emerging housing market, as a critical element of ongoing economic reforms, has drawn increasing attention. The complete abandonment of the socialist housing allocation system in the late 1990s has led to profound changes in housing distribution and consumption in urban China. This article, through analysis of Chinese Census 2000 data and other comparable datasets, examines housing dynamics in China and in its four autonomous municipalities in the late 1990s. It is found that urban housing conditions have improved by almost all accounts, while housing gaps were rapidly widening. Meanwhile, the mechanisms of housing distribution were shifting. Occupational status and educational level have become much more decisive factors. Regional disparities are also evident, due in part to differences in the reform measures undertaken. The drastic changes in the housing sector manifest the phenomenal socioeconomic changes due to twenty years' economic reforms. Reform is successful in increasing distributional inequality as a way to introduce market-based incentives and improve productivity. However, those who were in power have maintained and extended their advantages in the new system. Therefore, while the market is in the making, demographic and institutional factors instead of economic factors are more relevant in housing distribution and residential behavior.

JEL Classification: R21, P21, N35