Abstract
This paper examines whether there is housing disparity between homeowners and renters. Using data from Chinese Urban Household Survey, we find that homeowners on average have much higher housing quality than renters after controlling for household characteristics, regional factors, location and time fixed effects, and such disparity increases significantly over time. We also find that the disparity is mainly concentrated on the people who are disabled, divorced and the people with low education or rural hukou. Furthermore, we investigate possible factors contributing to this increasing disparity. Our results suggest that the disparity is largely driven by increasingly home improvement for owner-occupied houses but not rental houses. In addition, we also find that the 1994-1998 housing reform has contributed to inequality in homeownership between state employees and other groups, especially the disadvantaged groups such as people with rural hukou who are completely excluded from the reform. With housing prices soaring in the past two decades, people who benefited from the housing reform in the 1990s have enjoyed enormous housing appreciation. However, the disadvantaged people who were excluded from the housing reform now live in the bad housing conditions. Given the evidence that housing quality is key to both mental and physical health, our findings have important policy implications for Chinese government.
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Notes
Hukou refers to the household residential registration. Every household in China is required to have a registered residency with a local government authority, either urban (or “non-agricultural”) hukou or rural (or “agricultural”) hukou. Many resources and benefits, including access to health care, free public education, housing, better access to job, are restricted to local residents with urban hukou (Au et al., 2006; Glaeser et al., 2017).
See Chen et al. (2019) for details of the compiling methodology of the overall quality of infrastructure.
Amenity refers to the overall quality of infrastructure that aggregates z-scores of 12 infrastructures, including green rate and per capital of buses, taxies, park area, industrial enterprises, large enterprises, kindergartens, higher education institutes, health clinics, doctors, public library collections and star restaurants.
Taking advantage of the panel data, we have also focused on the individuals who lived in rental houses in 2002 and then changed from renting to owning. By using the household code and the individual code, we further construct a five-year balanced panel dataset by matching samples in UHS 2006 with those who also appeared in UHS 2002–2005 (The samples in UHS 2007–2009 cannot be matched with those in UHS 2002–2006). Appendix Table 18 shows the results by focusing on households who are renters in 2002 and have been interviewed repeatedly throughout the whole sample period. The estimated results, as reported in Column (3) of Table 18, indicate that, after controlling for other observables and unobservable household characteristics, the housing value for renters on average is 51,390 yuan less than that for homeowners, and the difference is statistically significant at the one percent level. This finding reaffirms our previous results. We thank Kelvin Wong for this insightful comment and suggestion.
We thank Kelvin Wong for pointing this issue out and providing this valuable suggestion.
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Acknowledgments
Mingzhi Hu acknowledges the supports from the National Natural Science Foundation of China (72274176, 72104088, and 72074097) and the Key Project of Natural Science Foundation of Zhejiang Province (LZ20G030002).
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Hu, M., Lin, Z. & Liu, Y. Housing Disparity between Homeowners and Renters: Evidence from China. J Real Estate Finan Econ 68, 28–51 (2024). https://doi.org/10.1007/s11146-022-09932-x
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DOI: https://doi.org/10.1007/s11146-022-09932-x