Public Housing and Market Segmentation: Evidence from the Joint Property Ownership Scheme in China

In this study, we examine the impact of owner-occupied public housing supply on private housing market outcomes, taking the Joint Property Ownership (JPO) scheme in China as an example. Using a dataset of resale private housing transactions in Beijing, we show that the opening of JPO projects for sale raises the prices of nearby resale private housing transactions by 5.8% relative to the opening of new private residential projects. Our result is not driven by the change in neighborhood composition, the establishment of new facilities, or the difference in location between JPO and private projects. Instead, the effect is consistent with the hypothesis that the JPO scheme, featured by strict purchase restrictions and shared property right ownership between the local government and homebuyers, has crowded out the supply of new private housing in local areas by creating a distinct housing market segment.

Keywords: Public Housing, Housing Price, Market Segmentation

JEL Classification: H44, O18, R28, R31

Suggested Citation: Suggested Citation

Li, Keyang and Su, Shidong and Zhang, Fan and ZHANG, Yanjiang, Public Housing and Market Segmentation: Evidence from the Joint Property Ownership Scheme in China (October 14, 2023). Available at SSRN: https://ssrn.com/abstract=4602075 or http://dx.doi.org/10.2139/ssrn.4602075