THE STORY OF UNAFFORDABLE HOUSING IN CHINA

Open Access
Author:
Yuan, Chuling
Area of Honors:
Interdisciplinary in Economics and Finance
Degree:
Bachelor of Science
Document Type:
Thesis
Thesis Supervisors:
  • Edward Coulson, Thesis Supervisor
  • David Shapiro, Honors Advisor
  • James Alan Miles, Honors Advisor
Keywords:
  • filtering model
  • unaffordable housing
  • Chinese housing
Abstract:
This thesis seeks to investigate whether the housing filtering model holds in China, to explore violated criteria of the filtering model, and to argue for a causal relationship between violated criteria and unaffordable housing for low- and middle-income families. The paper consists of an overview of Chinese housing policy since its establishment, a discussion of potential factors that contribute to unaffordable housing, and a series of hypothesis tests to specify violated criteria of the housing filtering model. There are several findings in this paper. First, the housing filtering process does not take place in China’s major cities. Second, strong housing demand from rich families worsens housing affordability for the poor. Third, speculation from rich families is partially accountable for unaffordable housing for low- and middle-income families. Overall, the findings suggest that tightening monetary policies will not necessarily improve housing conditions of the poor. Instead, expanding credit accessibility is a novel way to solve the problem.