Transitional Dynamics and Spatial Convergence of House-Price-to-Income Ratio in Urban China

Forthcoming, Economics Bulletin

12 Pages Posted: 20 Jul 2022

See all articles by Xiaoguang Liu

Xiaoguang Liu

Renmin University of China

Tsun Se Cheong

The Hang Seng University of Hong Kong

Jian Yu

Central University of Finance and Economics (CUFE) - School of Economics

Michal Wojewodzki

Faculty of Business, Lingnan University

Date Written: April 19, 2022

Abstract

Employing distribution dynamics analysis, we examine the future spatial dynamics and convergence of the relative house-price-to-income ratio (RHPIR) across 171 major Chinese cities during the 2002-2016 period. We find that the convergence occurs at a slow pace and is heterogeneous across cities and periods. From the policymakers’ perspective, our findings suggest that the policies implemented in China after the 2008 crisis to tackle housing unaffordability have been effective except for the least affordable housing markets of the four largest (first-tier) cities. Therefore, the housing markets in Shanghai, Beijing, Guangzhou, and Shenzhen require urgent policies to prevent the forecast growth in unaffordability and further divergence from other Chinese cities.

Keywords: House-price-to-income ratio, Transitional dynamics, Spatial levels, Convergence clubs, City tiers

JEL Classification: C31, D39, O18, P25

Suggested Citation

Liu, Xiaoguang and Cheong, Tsun Se and Yu, Jian and Wojewodzki, Michal, Transitional Dynamics and Spatial Convergence of House-Price-to-Income Ratio in Urban China (April 19, 2022). Forthcoming, Economics Bulletin, Available at SSRN: https://ssrn.com/abstract=4158500

Xiaoguang Liu

Renmin University of China ( email )

Beijing

Tsun Se Cheong

The Hang Seng University of Hong Kong ( email )

Hang Shin Link
Siu Lek Yuen
Shatin, Hong Kong
China

Jian Yu

Central University of Finance and Economics (CUFE) - School of Economics ( email )

Beijing
China

Michal Wojewodzki (Contact Author)

Faculty of Business, Lingnan University ( email )

8 Castle Peak Road
Tuen Mun
Hong Kong

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