Effects of Affordable Housing Land Supply on Housing Prices: Evidence from 284 Cities in China

Xue Han and Changchun Feng ()
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Xue Han: College of Urban and Environmental Sciences, Peking University, Beijing 100871, China
Changchun Feng: College of Urban and Environmental Sciences, Peking University, Beijing 100871, China

Land, 2024, vol. 13, issue 5, 1-17

Abstract: The policy objectives of affordable housing programs in China are two-fold: on the one hand, they are designed to assist low- and moderate-income families and reduce inequality; on the other hand, they are intended to lower commodity housing prices. However, the effects of affordable housing land on housing prices, particularly the between-city variation and the mechanisms behind the market effects, have not been sufficiently examined, making it difficult to evaluate the housing policy and improve it accordingly. In this study, we address these gaps by using a prefecture-level panel dataset covering 2009–2020, obtained from national land and housing transaction information platforms. We use a threshold model to investigate the threshold effect of population size and a mediating model to uncover the channels through which the supply of affordable housing land affects housing prices. The results confirm that the affordable housing land supply can have a beneficial influence in terms of slowing down the increase in housing prices. The population size plays a significant role in explaining the between-city market effect variations. In cities with a population greater than 10.78 million, increasing the supply of affordable housing land would cause the housing prices to increase. Meanwhile, in cities with smaller populations, increasing the supply of affordable housing land could lower the housing prices. The underlying mechanisms of the market effects vary across cities with different population sizes. Although affordable housing land crowds out commodity housing land in all cities, housing demand diversion only exists in cities with a smaller population. At present, China is experimenting with city-specific housing policies; our findings imply that decision makers should explore additional policy options, besides building on incremental construction land, in order to make housing more affordable in supercities in China.

Keywords: affordable housing; crowding out effect; diversion effect; threshold regression model; mediating effect; China (search for similar items in EconPapers)
JEL-codes: Q15 Q2 Q24 Q28 Q5 R14 R52 (search for similar items in EconPapers)
Date: 2024
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