Dynamic Trends and Structural Differences:A Comprehensive Measure of Housing Affordability in China

For the important impact of housing affordability to housing subsidies policy,and the lack of agreement with housing affordability in China,it is necessary to measure the housing affordability accurately.This thesis used several indicators including price-to-income ratio,rent-to-income ratio,and residual income to measure the housing affordability of Chinese housing market from 1998 to 2010,combined with real estate industry development process.There are two kinds of conclusions in this thesis,one kind is about the measure indicators of housing affordability,and the other kind is about the judgments of housing affordability in China and the revelations to housing subsidies policy. The main conclusions about the measure indicators of housing affordability are as follows.Firstly,the change of social housing standards must be considered to calculate the measure indicators of housing affordability,for the housing affordability is strongly influenced by social housing standards such as area in addition to income and housing prices.Secondly,as a reference index,between 5 and 7 is a reasonable standard of price-to-income ratio to measure the housing affordability of Chinese housing market,which is higher than the usually considered standard of between 4 and 6 for developing countries.Thirdly,price-to-income ratio and residual income are more applicable for Chinese housing market among all the indicators of housing affordability,because of statistical standards and calculation methods,and both of the two indicators have showed the same dynamic trends and structural differences of housing affordability in China. The main conclusions about the judgments of housing affordability in China included three points.The first is that the housing affordability of Chinese housing market shows a downward trend in general,although the income growth rate is much higher than the house prices.The main reason is that the level of social housing area increased rapidly.From 1998 to 2003,the price-to-income ratio is between 6 and 7,it shows that the Chinese urban households have the housing affordability in general;and from 2004 to 2010,the price-to-income ratio is mostly between 7 and 8,only in 2008 the indicator is 6.9 by the global financial crisis and housing subsidies from Chinese government,in this period,Chinese urban households generally lack of housing affordability.The second is that the structural difference of the housing affordability is obvious.For example,the price-to-income ratio in 2010,for the highest income Chinese urban households is 3.3,for the middle-income households is 8.9,while for the lowest income households is 22.0,the gap between the highest-income households and the lowest-income households is up to nearly seven times.From 1998 to 2010,the housing affordability of high-income households has not changed much,but the housing affordability of low-income households has dropped rapidly,while the housing affordability of middle-income households has dropped significantly.That is to say,the changes of housing affordability for different income level household are not the same.The situation of low-income households' housing affordability has become even worse;and the middle-income households' housing affordability could not be optimistic. Furthermore,several revelations to housing subsidies policy can be seen from the measure of housing affordability in China.First,housing subsidies policy should be dynamically adjusted according to the trends of housing affordability.Second,the coverage of housing subsidies is closely linked to the structural differences of housing affordability,the households who have housing affordability should get houses from market,and the households who lack of housing affordability should get housing subsidies from government.Last,these measure indicators do not include households existing assets,so it is necessary to consider households existing assets when housing subsidies policy is making.