Urban housing policies and housing affordability in Shanghai 1998 - 2010

Abstract

As part of the establishment of a socialist market economy and the economic opening, China carried out a comprehensive housing reform starting in the 1980s. The housing market was built into an essential pillar of the economy, with a high share of public housing privatized. The thesis aims to comprehensively understand the housing policy reform in Shanghai within its historical context and to categorically evaluate the objectives and instruments established for the immediate post-reform period, emphasizing housing affordability. The research is conducted by a systematic compilation and evaluation of policy documents and scientific literature. The assessment of the policy outcomes is additionally based on the analysis of empirical data. In Shanghai, mainly three instruments were used for the implementation of the housing reform 1998 - 2010: The Housing Provident Fund (HPF) to strengthen demand, as well as two programs targeting affordable housing for different income groups: Economic and Affordable Housing (EAH) and Cheap Rental Housing (CRH). While the HPF achieved good results in Shanghai in the overall comparison across China, EAH and CRH were less successful in the examined period due to some structural weaknesses. Overall, the municipality of Shanghai performed well in achieving the economic objectives of the reform: A stable housing market and the necessary financial instruments were well established after 1998. The homeownership ratio increased to nearly 80% by 2010. However, the establishment of an affordable housing supply system was less successful. Implementing the policy instruments aimed at affordability proved problematic in Shanghai mainly due to the financing structure. Housing prices rose significantly during the examined period, and the price-income ratio increased considerably over the years, mainly in the lowest income quintile. Simultaneously, very few new subsidized or otherwise affordable housing units were built. Overall, the thesis provides a more nuanced understanding of the complex post-reform housing policy processes in Shanghai and, therefore, a foundation for future research and policy designs.