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Challenges facing housing affordability in Beijing in the twenty‐first century

Author

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  • Liu Mengjie
  • Richard Reed
  • Hao Wu

Abstract

Purpose - The purpose of this paper is analyse to what extent the high price had led to low levels of housing affordability in the period 2002‐2006 in Beijing. Due to the importance of housing for local residents and the crucial position that real estate market in the Chinese economy is currently in, research into the housing affordability issues is now essential. It is important to consider the social circumstances that are predominantly related to both the standard of living and the national economy in Beijing. Design/methodology/approach - The housing price to income ratio (PIR) method and Housing Affordability Index (HAI) model are used to measure housing affordability in Beijing. Then, the reasons for the high housing prices in Beijing are discussed and government homeownership‐oriented policies to help citizen on housing issues are examined. Finally, future proposals which can contribute to ease the housing affordability problem are recommended. Findings - The main findings in this research are that the PIR in the Beijing housing market (based on an average gross floor area of 60 m2) fluctuated between 6.69 and 9.12, respectively, between 2002 and 2006. Over the same period, the HAI was approximately 75 between 2002 and 2004, although decreasing sharply in 2005 (65.78) and 2006 (51.33). It appears that the Chinese government's new housing provision policies may be able to ease this affordability problem, especially with regards to the economic housing scheme. Originality/value - China has experienced rapid growth in gross domestic product (GDP) with a substantial increase in house prices which have affected housing affordability for typical Beijing households. Since the housing reform in China commenced in 1998, Beijing residents, government officers and academics have been concerned about high housing prices in the city, which is considered beyond the buying capability of the ordinary residents. The results are designed to provide an insight into the level of housing affordability in Beijing and whether a trend exists.

Suggested Citation

  • Liu Mengjie & Richard Reed & Hao Wu, 2008. "Challenges facing housing affordability in Beijing in the twenty‐first century," International Journal of Housing Markets and Analysis, Emerald Group Publishing Limited, vol. 1(3), pages 275-287, August.
    • Handle: RePEc:eme:ijhmap:v:1:y:2008:i:3:p:275-287
    DOI: 10.1108/17538270810895114
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    Citations

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    Cited by:

    1. Coskun Yener & Jadevicius Arvydas, 2017. "Is there a Housing Bubble in Turkey?," Real Estate Management and Valuation, Sciendo, vol. 25(1), pages 48-73, March.
    2. Esra Alp Coskun & Nicholas Apergis & Yener Coskun, 2022. "Threshold effects of housing affordability and financial development on the house price‐consumption nexus," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 27(2), pages 1785-1806, April.

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