Housing Prices, Inter-generational Co-residence, and “Excess” Savings by the Young: Evidence using Chinese Data (original) (raw)
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The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research. At least one co-author has disclosed a financial relationship of potential relevance for this research. Further information is available online at http://www.nber.org/papers/w20057.ack NBER working papers are circulated for discussion and comment purposes. They have not been peerreviewed or been subject to the review by the NBER Board of Directors that accompanies official NBER publications.
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2013
This paper examines the role of rising housing prices and borrowing constraints as determinants of China's high household saving rate, especially among young households. Using a life-cycle model of saving behavior in the presence of borrowing constraints, we show that the relationship between housing prices and saving exists only under certain conditions and for certain groups of households. Specifically, when the return on financial instruments is low (which is the case in China), the saving rate of young households may increase with housing prices. This relationship, moreover, is non-linear and depends on the level of wealth. Employing an empirical strategy motivated by the theoretical model, we analyze a dataset of over six thousand Chinese urban households spanning the years 1995, 2002 and 2007. We find evidence that higher housing prices do in fact increase the saving rates of young households. We also find evidence for the predicted non-linearity.
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In the past three decades the Chinese housing market has been profoundly transformed as China emerged as a world "market" economy. Now, a growing middle class is pursuing the Chinese Dream-a car, an apartment and a family. While there is substantial research on the Chinese economy and studies of housing in individual cities, we know less about the behavior of the youngest cohorts who are now entering the homeowner market. How do young adults (the Chinese Millennial generation) enter the urban housing market? Using new national surveys of China Household Finance, we ask the questions, (a) is the process of homeownership available for all? Are young adults in urban China able to access the Chinese dream of ownership? (b) what is the variation in access to ownership across dimensions of sociodemographic and institutional status? and, (c) how do parental transfers impact the ownership trajectory? The analysis confirms anecdotal studies that ownership is high even for those born in the 1980s. As expected, income and assets are important explanations of ownership as is parental economic transfers. However, the institutional structure of housing reform and government policies in China continue to play an important role. Furthermore, there are important differences between the 1970 cohort in contrast to the 1980s and 1990s cohort. Although there is a growing rental sector, overall the Chinese shift to a homeownership society is still largely successful.
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Housing affordability has become a critical challenge worldwide, consequently constraining young generation from entering the housing market. Despite growing attention to housing inequality in China, little research has been undertaken to reveal the extent to which a family of origin contributes to housing inequality among young adults. Family resources could support the young generation to achieve homeownership not only directly through intergenerational transfers of wealth, but also indirectly through intergenerational transmission of socioeconomic characteristics. Using the 2013 Fudan Yangtze River Delta Social Transformation Survey, this study constructs a structural equation model to examine the direct and indirect influence of parents' resources on the young generation's housing outcomes. The results show that the direct influence of parents' homeownership is prominent, whereas the impact of transmitted socioeconomic status is limited. Housing advantages of parents, derived from their superior institutional status during China's housing reforms, are being transmitted to their offspring, particularly to sons.
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Although differences between generation X (born between 1961 and 1980) and Y (born between 1981 and 1995) about the factors which drive homeownership have policy implications, little or no research has been undertaken into this issue. Results of interviews undertaken show that generation X and Y agree that price was the most important factor and that there are more generation Y reliant on government help. Questionnaire results found that “income and housing prices” and “affordability and accessibility” were the most important factors among generation X and Y, respectively. This paper concludes that policy makers need to consider the generation differences.
Homeownership is a dream of many nations. It is an important economic activity, a means to develop personal wealth, a major factor which affects fertility and a measure of financial success. While previous research shows that there are differences in generations, leading to generation gap. The differences between generation X (born between 1961 and 1980) and Y (born between 1981 and 1995) on factors which drive homeownership, although has policy implications, no or few research has compared and contrast their differences before. This paper aims to fill the gap. 165 generation X and 178 generation Y were interviews about the factors which affect their enthusiasm for homeownership. Results of the interview shows that generation Y focuses more on affordability but generation X focuses more on price which may be due to their differences in saving over the years. Generation Y suggests that marriage is an important factor but not generation X. Third, generation Y rely more on the government’s help than generation X. Factors obtained from the interviews laid the ground for questionnaire design. Questionnaire research results of 679 generation X and 621 generation Y were analyzed by Principal Component Factor Analyses. It is found that “income and housing prices” were the most important factor among the generation X. The generation Y suggested that “affordability and accessibility” of housing unit was the most important factor that drive the demand for homeownership. This paper concludes that when government implements housing policies, it has to consider generations’ differences. It also implies that the lower change in marriage may also lead to a change in demand of homeownership.
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Journal of Housing and the Built Environment, 2018
After three decades of housing reform in China, housing assets constitute a sizable share of family wealth but are distributed unevenly, as registered homeowners are predominantly male. This is partly because males generally have higher incomes than females and can therefore contribute more to the financing, but also because males receive more intergenerational transfers. On the basis of 31 in-depth interviews from Chongqing, this article seeks to answer two questions: (1) How and why does the gender of the recipient affect the negotiation of intergenerational transfers? and (2) What are young women's possibilities to accumulate housing assets? The research findings show that young women either ask their parents for help to secure housing assets before marriage or they attempt to co-own a home with their husbands after marriage. Women who do not succeed in either of these strategies do not accumulate housing assets and thereby risk their rights to the home if their marriage is dissolved.
Habitat international, 2020
In China's past decades of marketization reforms, original urban dwellers and early settlers in the home ownership sector enjoyed a drastic improvement in living conditions and family wealth stored in properties. Despite their significant contribution to the urban economy, rural migrants benefited far less from the housing market growth. Institutional discrimination, such as duality in welfare state provisions due to hukou segregation is often seen as main the mechanism behind this urban-rural discrepancy. With three elaborated case studies of generational housing pathways from Chongqing, this paper contributes to the debate of urban-rural housing inequality from a longitudinal perspective, focusing on the role of intergenerational transfers of wealth. We find that the original hukou, the original place of living and the housing positions of the parents all have great influence on the younger generation's housing experiences. The gaps between the urban locals and the migrants in housing resulted from generational accumulations of unbalanced opportunities in accessing housing.
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Intergenerational support between parents and children in Chinese cities has been dramatically affected by recent social changes. In this paper, we investigate the changing pattern of intergenerational housing support between retired old parents and their children, and the legacy of public housing in shaping this pattern. By initially establishing an up-to-date picture of intergenerational housing support between retired old parents and their children, we seek to determine how this support depends on whether parents have previously been allocated public housing, and if so, on whether they have disposed of it or have continued to occupy it. We use a survey with 1000 retired old people from Tianjin, China in 2009 for the analysis. The analysis utilises a support flow model to go beyond studying housing support per se, and study the flow of intergenerational support in both directions and in different forms.
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