Does China Face a Housing Affordability Issue? Evidence from 35 Cities in China

This paper constructs upper bound of housing expenditure-to-income ratio on the basis of shelter poverty to conquer the caveats of current literature. The author estimates housing user cost in China to indicate the degree of housing affordability of cities in China. Descriptive analysis shows that generally speaking there exists no housing affordability issue in most cities in China. The empirical result of 35 large and medium cities in China from 1996 to 2007 indicates that housing price has played a more dominant role in housing affordability issue than income. In addition, house size also affects significantly housing affordability. Therefore the development of more affordable houses is an effective measurement to solve housing affordability for residents. It is also concluded from empirical result that housing affordability issue is decreased in the years of housing reform, the increasing ratio of population hasn't led to the difference of housing affordability in cities, housing affordability doesn't have significant different in different geographic location.