What Pushes Up China’s Urban Housing Price So High?

Peng Li and Shunfeng Song

Chinese Economy, 2016, vol. 49, issue 2, 128-141

Abstract: Since the housing reform in 1998, real housing prices in China’s urban areas have increased 60 percent, much faster than the growth rate of disposable income. Consequently, the price-income ratio rose from 7.11 in 1998 to 15.37 in 2012, indicating a dramatic decrease in housing affordability. This article first describes the skyrocketing of China’s urban housing prices. It then discusses factors that led to the soaring housing prices, including institutional, cultural, and economic factors. Finally, the article examines recent government housing policies and their effectiveness. The article argues that removing the local government’s double monopoly powers and replacing taxes and fees at transactions with property taxes during possession could better control China’s fast growing housing price.

Date: 2016
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DOI: 10.1080/10971475.2016.1143306

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