Since the housing reform in 1998, China's urban housing market has developed rapidly. At the same time, the characteristics of housing markets in various cities have also diverged. Some cities have high housing prices, rapid growth, and heavy pressure for residents to buy homes; Meanwhile, in other cities, the inventory of commercial residential properties is excessively large. The differentiation in the housing market has led to issues of weak targeting and suboptimal regulation in central government policies: while tightening controls in hotspot cities can curb rapid price increases in these cities, they also suppress reasonable demand in other cities' housing markets. Against this backdrop, in 2016 the central government introduced new policies tailored to each city, delegating the responsibility for housing market regulation to city-level governments.
The Peking University-Lincoln Center conducted an empirical study on the effectiveness of "city-specific policies" in stabilizing housing prices, with the results recently published in the international academic journal International Journal of Housing Markets and Analysis）。
In this study, we constructed a housing market supply and demand model to estimate the impact of "city-specific policies" on housing price growth rates in 35 major cities across China. The results show that one year after the implementation of the "city-specific policies" in 2017, the impact of housing market regulation on housing price growth rates in various cities showed heterogeneity: among the samples, cities with higher or faster housing prices before 2016 were presentIn 2017, the actual housing price was lower than the price without the "city-specific policies" scenario; In the sample, cities with lower or slower housing prices before 2016 had higher actual prices in 2017 than those without the "city-specific policy" scenario. This shows that regulatory measures that adopt "city-specific measures" and "targeted remedies" can effectively address the practical problems facing the housing markets in each city and improve regulatory efficiency.
Against the backdrop of differentiated urban housing market characteristics, "city-specific policies" are necessary and effective for stabilizing the housing markets of various cities. Housing market regulation, with city governments as the main responsible bodies, grants them greater regulatory responsibility and autonomy. By selecting locally adapted regulatory policies, they can address problems encountered during housing market development in a targeted manner, thereby achieving the overall goal of stabilizing the housing market set by the central government to local authorities. When the future housing market in cities enters a relatively stable phase, we recommend that city governments rely more on market forces to develop highly efficient housing markets. At the same time, the government should focus more on providing various affordable affordable housing for low- and middle-income families, balancing market-based efficiency with social fairness.
Citation: Li, Wenjing and Liu, Zhi (2023), "Diversified urban housing markets and decentralized market regulation in China", International Journal of Housing Markets and Analysis, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/IJHMA-03-2023-0036
