Is There a Housing Affordability Issue in China

This paper contributes to defining dynamic upper boundary of the percentage of housing expenditure to income ratio via Engel's Coefficient.Using housing market data of 35 large and medium cities in China from 1996 to 2007,this paper examines housing affordability difficulties by computing housing user cost.The statistical analysis shows that the majority of Chinese cities do not face severe housing affordability difficulty.The results exhibit that the housing price has played a more important role in housing affordability than household income.Meanwhile,housing size has exerted a great impact on housing affordability.Accordingly,developing more affordable houses is an alternative to mitigate the housing affordability issue in China.In addition,the author also finds that the housing reform facilitates housing affordability issue due to low sales price of the public houses,while population growth rate and geographic locations have no significant impact on housing affordability.