The Future Evolution of Housing Price-to-Income Ratio in 171 Chinese Cities

Annals of Economics and Finance 23(1), 159-196, 2022

Posted: 4 Jan 2023

See all articles by Xiaoguang Liu

Xiaoguang Liu

Renmin University of China

Jian Yu

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

Tsun Se Cheong

The Hang Seng University of Hong Kong

Michal Wojewodzki

Faculty of Business, Lingnan University

Date Written: April 13, 2022

Abstract

This paper examines the future dynamics of the relative housing price-to-income ratio (RHPIR) in China. We find that the convergence in RHPIR will be more congregated in the non-center cities of city clusters, the cities from the eastern region, with a net outflow of population, and low economic policy uncertainty (EPU). The convergence clubs will emerge in the cities with a net outflow of population and from the central and northeastern regions. The center and the non-center cities of city clusters will converge to parallel affordability paths. We pinpoint the cities with precise ranges of RHPIR that require special attention from the policymakers aiming at convergence in housing affordability.

Keywords: Distribution dynamics, Mobility probability plot, Convergence, Housing price-to-income ratio, Economic policy uncertainty.

JEL Classification: D39, O18, P25

Suggested Citation

Liu, Xiaoguang and Yu, Jian and Cheong, Tsun Se and Wojewodzki, Michal, The Future Evolution of Housing Price-to-Income Ratio in 171 Chinese Cities (April 13, 2022). Annals of Economics and Finance 23(1), 159-196, 2022, Available at SSRN: https://ssrn.com/abstract=4158510

Xiaoguang Liu

Renmin University of China ( email )

Beijing

Jian Yu

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

Beijing
China

Tsun Se Cheong

The Hang Seng University of Hong Kong ( email )

Hang Shin Link
Siu Lek Yuen
Shatin, Hong Kong
China

Michal Wojewodzki (Contact Author)

Faculty of Business, Lingnan University ( email )

8 Castle Peak Road
Tuen Mun
Hong Kong

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