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Analysis on Housing Affordability of Urban Residents in Mainland China Based on Multiple Indexes: Taking 35 Cities as Examples

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Listed:
  • Yun Si Li

    (Central University of Finance and Economics)

  • Ai Hua Li

    (Central University of Finance and Economics)

  • Zhi Feng Wang

    (Central University of Finance and Economics)

  • Qiang Wu

    (Tsinghua University)

Abstract

Over the last 10 years, the soaring housing prices have raised concerns over ‘affordability’ in Chinese housing market, although it is still not enshrined in agreed standards, partly because of different opinions about how it should be measured. To overcome the inadequacy of a single index, we examine the housing affordability of 35 large and medium cities in China from 2009 to 2016 using price-to-income ratio (PIR), monthly payment-income ratio (MIR) and the residual income approach (RI). With consideration of the characteristics of China’s real estate market, we have re-discussed the reasonable range of the indexes. The comparison of single index between cities shows significant periodicity and multi-index clustering analysis reveals regional characteristics, which help us to further the understanding of housing affordability. In the end, policy recommendations on reforming Chinese urban housing system are suggested according to the differences and changing laws of housing affordability among cities.

Suggested Citation

  • Yun Si Li & Ai Hua Li & Zhi Feng Wang & Qiang Wu, 2019. "Analysis on Housing Affordability of Urban Residents in Mainland China Based on Multiple Indexes: Taking 35 Cities as Examples," Annals of Data Science, Springer, vol. 6(2), pages 305-319, June.
    • Handle: RePEc:spr:aodasc:v:6:y:2019:i:2:d:10.1007_s40745-018-0168-x
    DOI: 10.1007/s40745-018-0168-x
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    References listed on IDEAS

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    1. Michael Stone, 2006. "What is housing affordability? The case for the residual income approach," Housing Policy Debate, Taylor & Francis Journals, vol. 17(1), pages 151-184.
    2. Zan Yang & Songtao Wang, 2011. "The impact of privatization of public housing on housing affordability in Beijing: An assessment using household survey data," Local Economy, London South Bank University, vol. 26(5), pages 384-400, August.
    3. Nan-Kuang Chen & Han-Liang Cheng, 2017. "House price to income ratio and fundamentals: Evidence on long-horizon forecastability," Pacific Economic Review, Wiley Blackwell, vol. 22(3), pages 293-311, August.
    4. Stephen D. Oliner, 2016. "Housing Conundrum: A Shortage of Demand or Supply?," Business Economics, Palgrave Macmillan;National Association for Business Economics, vol. 51(3), pages 161-165, July.
    5. Gan, Quan & Hill, Robert J., 2009. "Measuring housing affordability: Looking beyond the median," Journal of Housing Economics, Elsevier, vol. 18(2), pages 115-125, June.
    6. I-Chun Tsai & Chien-Wen Peng, 2012. "A panel data analysis for housing affordability in Taiwan," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 36(2), pages 335-350, April.
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