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Property rights and housing prices: An empirical study of small property rights housing in Shenzhen, China

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  • Lai, Yani
  • Zheng, Xian
  • Choy, Lennon H.T.
  • Wang, Jiayuan

Abstract

Small Property Rights Housing (SPRH) is an important part of informal housing in China. SPRH is defined as housing developed with collective land ownership that is then sold to outside homebuyers such as non-indigenous villagers. This housing practice is legally forbidden and comes without formal titles. SPRH is popular in big Chinese cities where formal housing prices are constantly rising and increasingly unaffordable for many urban residents. However, research on SPRH is rare. Therefore, this study aims to investigate the effects (or the lack thereof) of de-jure property rights on housing prices by using the empirical case of Shenzhen where SPRH and FPRH estates constitute the main sources of urban housing for its residents. We collected both SPRH and formal Full Property Right Housing (FPRH) data in the Shenzhen housing market and adopted the Boundary Fixed Effect method and matching strategy to mitigate the bias caused by unobservable location and neighborhood factors. This empirical study shows that the lack of de-jure property rights has negative and significant effects on housing prices. The average housing price for SPRH apartments is, ceteris paribus, 52.82% lower than for formal FPRH apartments. Also, the premium of property rights varies across two administrative regions with different locations and economic environments, and the premium decreases as the age of the building increases.

Suggested Citation

  • Lai, Yani & Zheng, Xian & Choy, Lennon H.T. & Wang, Jiayuan, 2017. "Property rights and housing prices: An empirical study of small property rights housing in Shenzhen, China," Land Use Policy, Elsevier, vol. 68(C), pages 429-437.
    • Handle: RePEc:eee:lauspo:v:68:y:2017:i:c:p:429-437
    DOI: 10.1016/j.landusepol.2017.08.010
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    3. Mengzhu Zhang & Shenjing He, 2020. "Informal Property Rights as Relational and Functional: Unravelling the Relational Contract in China's Informal Housing Market," International Journal of Urban and Regional Research, Wiley Blackwell, vol. 44(6), pages 967-988, November.
    4. Johan Graafland, 2020. "When Does Economic Freedom Promote Well Being? On the Moderating Role of Long-Term Orientation," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 149(1), pages 127-153, May.
    5. Yang, Xintong & Dong, Xin & Yi, Chengdong, 2022. "Informal housing clearance, housing market, and labor supply," Labour Economics, Elsevier, vol. 78(C).
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    7. Yang, Chen & Qian, Zhu, 2022. "The complexity of property rights embedded in the rural-to-urban resettlement of China: A case of Hangzhou," Land Use Policy, Elsevier, vol. 122(C).
    8. Li, Ling & Xia, Fangzhou, 2022. "Wandering in the gray: The pricing of housing restricted by land use regulation in Beijing, China," Land Use Policy, Elsevier, vol. 115(C).
    9. He, Shenjing & Wang, Dong & Webster, Chris & Chau, Kwong Wing, 2019. "Property rights with price tags? Pricing uncertainties in the production, transaction and consumption of China’s small property right housing," Land Use Policy, Elsevier, vol. 81(C), pages 424-433.

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