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Consumption and Tenure Choice of Multiple Homes in Transitional UrbanChinaYouqin Huanga; Chengdong Yib

a Department of Geography and Planning, State University of New York, Albany, NY, USA b

Department of Urban and Real Estate Management, Central University of Finance and Economics,Beijing, PRC

Online publication date: 10 June 2010

To cite this Article Huang, Youqin and Yi, Chengdong(2010) 'Consumption and Tenure Choice of Multiple Homes inTransitional Urban China', International Journal of Housing Policy, 10: 2, 105 — 131To link to this Article: DOI: 10.1080/14616718.2010.480852URL: http://dx.doi.org/10.1080/14616718.2010.480852

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International Journal of Housing PolicyVol. 10, No. 2, 105–131, June 2010

Consumption and Tenure Choiceof Multiple Homes in TransitionalUrban China

YOUQIN HUANG* & CHENGDONG YI**

*Department of Geography and Planning, State University of New York, Albany, NY, USA,**Department of Urban and Real Estate Management, Central University of Finance and Economics,Beijing, PRC

Abstract As China is becoming a country of homeowners, multiple homeownership is emerg-ing. The existing literature on tenure choice focuses on the primary home and the literature onthe consumption of multiple homes focuses on second homeownership only. We argue that de-cisions regarding whether to have multiple homes and what kind of tenures to have for multiplehomes are all part of the complex decision-making for the ‘housing portfolio’, thus have tobe understood together. With a conceptual framework that features both socio-economic andinstitutional determinants and 2005 China General Social Survey data, this paper studies thepatterns and tenure dynamics of multiple homes in urban China. While life-cycle, affordabilityand generational transfer contribute to the consumption and tenure decision of multiple homes,the persisting household registration system and continuing allocation of subsidised housinglead to the peculiar tenure combination of renting one home and owning additional homes,and living in public housing and owning additional homes.

Key Words: Homeownership, multiple homes, tenure choice, China

Introduction

China has experienced probably one of the most dazzling housing success stories inthe last two decades, with unprecedented improvement in housing consumption andhomeownership. Before 1988, the majority of urban households in Chinese cities livedin public rental housing, and housing shortage and residential crowding were acute(Huang, 2003, 2004). Yet, the housing reform in the last two decades has profoundlychanged housing provision and consumption, and private homeownership has beenencouraged. As a result, the rate of homeownership in Chinese cities has increasedfrom 20 per cent in the 1980s to more than 82 per cent in 2007, and per capita livingspace has increased from 4 to 28 m2 (Huang & Clark, 2002; Huang, 2004; Zheng,2007).1 With rapidly rising income and high return on real estate investment in the

Correspondence Address: Youqin Huang, Department of Geography and Planning, State University ofNew York, Albany, New York 12222, USA. Email: [email protected]

ISSN 1461-6718 Print/1473-3269 Online 10/020105–27 C© 2010 Taylor & FrancisDOI: 10.1080/14616718.2010.480852

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106 Y. Huang & C. Yi

recent housing boom, multiple homeownership is also emerging in Chinese cities,with about 12 per cent of urban households occupied (rent or own) two or morehomes in 2005 (Huang & Yi, 2009). This is somewhat disturbing, as massive low-income households in Chinese cities lack housing access and suffer severe housingcrowding (Sato, 2005; Wang & Murie, 1999; Huang, 2005). With rapidly increasinghousing inequality in Chinese cities (Huang & Jiang, 2009), the Chinese governmentis determined to address the problem of low-income housing with massive housingsubsidies in the near future (State Council, 2007). A better understanding of theconsumption of multiple homes can offer insights and help better policy design forlow-income housing. Despite massive media coverage and anecdotal evidence, weknow very little about multiple homes, and how they are related to the increasinglycomplex housing and tenure decision-making in Chinese cities. The existing literatureon tenure choice focuses exclusively on primary home, and the literature on multiplehomes focuses on the decision-making for second homes only, while the combineddecision of whether to have multiple homes and what kind of tenures to have is stillvery much unknown. It is the goal of this paper to understand the pattern, tenurestructure and the decision-making of multiple homes in Chinese cities.

Scholars have been using primary home and second home to refer to the differenthomes that households have. In general, primary home is defined as a property thata household lives in most of the time, while second home is defined as a property(owned or leased) serving as the occasional residence of a household that usuallylives elsewhere – often for leisure-related activities (Coppock, 1977). In this paper,because of the lack of information on the frequency of occupancy (whether it is foroccasional use or not) or usage (whether it is for leisure/recreation/investment orprimary residence), we cannot define primary home and second home in the samefashion. Instead, we have information about the current dwelling that households livein (own or rent) at the time of survey (which may be temporary), and whether theyown additional homes elsewhere that they do not live in at the time of survey. If theyowned additional dwellings elsewhere, they are considered to occupy multiple homes.Because of the way the question was asked in the survey – ‘besides this dwelling, doyou own additional dwellings elsewhere?’ – they may own or rent current housing,but can only own additional homes. Thus the tenure structure in Chinese cities nowincludes the following four types: rent a one and only home; own a one and onlyhome; rent one home (current dwelling) and own additional homes; and own two ormore homes. We use ‘multiple home occupancy’ or ‘multiple home consumption’ torefer to the last two groups, and ‘multiple homeownership’ to refer to the last group.

While the rich and noble in China have always owned more than one home inhistory (Feng & Liu, 2000), the massive multiple home consumption and ownershipby emerging middle-class Chinese households is a new phenomenon mainly drivenby the recent housing and economic reform. During the socialist era, housing stockin Chinese cities was dominated by public rental housing provided by municipalgovernments and work units. Urban households had few options but to wait in a long


Multiple Homes in Transitional Urban China 107

queue for the allocation of public housing, which was based on a set of non-monetaryfactors such as job rank, job seniority, marital status, household size and housingneed (Huang & Clark, 2002; Wang & Murie, 1999). Due to extremely low rentsand limited government investment in housing, there were acute housing shortageand residential crowding. Occupying multiple homes was generally impossible andpolitically not allowed. Since 1988, the Chinese government has launched housingreform nationwide to privatise the existing welfare-oriented housing system. In addi-tion to raising rents and privatising existing public housing (through subsidised saleto sitting tenants, similar to the ‘right to buy’ programme in the UK), developers areallowed to provide private housing – called ‘commodity housing’ (shang ping fang),which has become an increasingly large share of the urban housing stock. In 1998, theState Council (1998) officially declared the end of public housing provision to deepenthe privatisation in the housing system. At the same time, homeownership has beenpromoted through various means,2 which is a complete reversal of the elimination ofprivate homeownership in the socialist era. As a result, the rate of homeownershipin Chinese cities has surged to more than 80 per cent in 2007 in a short span of twodecades, making China one of the countries with the highest rate of homeownership3

(see Wang & Murie, 1999; Huang & Clark, 2002 for more details on housing re-form). Thus the ongoing housing reform has brought more housing options to urbanhouseholds and given them the freedom of housing choice. Urban households areable to choose their preferred housing type, tenure, and neighbourhoods, which hasincreased residential mobility, and resulted in household and neighbourhood sorting(Li, 2003; Huang & Deng, 2006; Huang, 2005).

With increasing homeownership, rapidly rising income and changing life styles(with higher private auto ownership, more leisure time and a faster pace of urban life),multiple homeownership similar to the West is emerging in China. Yet, it also emergesfrom the transitional housing system which still endures the socialist legacy. First,despite the end of public housing provision in 1998 (State Council, 1998), resourcefulwork units such as major universities and government ministries continue to providesubsidised housing (rental or owned) to their employees. It is not uncommon forpeople like professors and government employees to live in subsidised rental housingclose to their workplace (and other services such as schools) for convenience, andown another home in the same city for occasional use or investment. In other words,households can still access subsidised housing even if they can afford or have alreadypurchased private housing on the market. In addition, subsidised housing in theowning sector often offers partial property rights,4 which constrains households fromfreely disposing of their housing.

Second, the household registration (hukou) system,5 one of the most importantinstitutions that defines a person’s socio-economic status and access to welfare bene-fits, continues to favour urban residents with nonagricultural hukou registered locally,while migrants with hukou (agricultural or nonagricultural) registered elsewhere areseverely constrained in accessing subsidised housing, education and medical services



(Cheng & Selden, 1994; Chan, 1996; Wu, 2002). Thus, despite long-term living andworking in cities, most migrants build/own houses back home for their potential re-turn. Furthermore, good infrastructure and services are not distributed evenly acrossthe space. In particular, superior public schools are becoming an important factor forpeople to buy/rent another dwelling so that their children can attend good schoolsnearby. All these factors encourage the rapid growth of multiple home consumptionand ownership in Chinese cities.

Yet, we know very little about multiple homeownership. The existing literature ontenure choice focuses on primary home only, and the literature on second home fo-cuses on whether households own second home, and has focused on leisure/recreationas the main driving force for a second home. Because the decisions-making for dif-ferent homes are not, on the one hand, necessarily in time order, and, on the other,they affect each other, we argue that decisions regarding whether to have multiplehomes and what kind of tenures to have for them are all part of the complex decision-making for a ‘housing portfolio’. Thus, instead of examining the ownership of secondhome, the consumption and tenure choice for multiple homes have to be understoodtogether. In this paper, we aim to understand the patterns and dynamics of tenurechoice for multiple homes in Chinese cities. The rest of the paper is organised as fol-lows: after a literature review, we will provide a conceptual framework to understandthe consumption of multiple homes in Chinese cities. Then an empirical analysis willbe conducted to test hypotheses, followed by conclusions and policy implications.

Literature Review

There is not much research on the consumption of multiple homes per se. Yet, this re-search is related to two different but associated bodies of literature: literature on tenurechoice and second homeownership. Research on tenure choice in market economiesoften includes two main approaches: the economic and the socio-demographic per-spective. Assuming households are economically rational, housing economists arguethat households choose a certain type of tenure to maximise utilities within a givenbudget constraint (e.g. Arnott, 1987). In this approach, homeownership is a consump-tion and an investment decision by households in competitive housing markets. Soeconomic factors such as income, assets and relative prices are considered as the mostimportant factors affecting tenure choice (e.g. Henderson & Ioannides, 1983, 1985,1987; Plaut, 1987), while demographic factors are considered to affect tenure choicethrough changing socio-economic status only and not through the life cycle per se(Kendig, 1984; McCarthy, 1976). In contrast, demographers, geographers and sociol-ogists argue that tenure choice is a complicated event that is intrinsically linked withcharacteristics of households and changes in the housing market (Clark & Dieleman,1996). While recognising the importance of income and the housing market, theyargue that demographic characteristics of households, such as age, family size and



composition trigger events which occur during the life course, such as birth of chil-dren and marriage, are significant factors affecting tenure choice (Clark et al., 1996;Deurloo et al., 1994; Morrow-Jones, 1988). When combined, these two approachesgenerally offer a good understanding of the tenure decision; yet, they tend to ignorethe role of the state and other institutions in tenure decision.

In comparison, research on tenure choice in Chinese cities is limited, althoughexpanding rapidly. This is because most Chinese urban residents were not giventhe freedom of tenure choice until 1988, when the housing reform was launchednationwide after trials in a few cities. At the same time, systematic data on housinghave not been available to the public until recently, and scholars have relied on varioussmall-scale surveys.6 Existing research focuses on the persistent role of socialist in-stitutions on tenure decision due to the partial reform, while household characteristicsand housing markets are beginning to play their roles (e.g. Li, 2000, 2003; Huang &Clark, 2002; Huang, 2004; Zheng, 2007; Yi, 2005). It is often argued that householdswith higher political status (e.g. high job seniority, high job rank, party membership),affiliated with powerful/resourceful work units, and those with urban householdregistration are more likely to own. There are also different types of homeownership,as public housing is often sold with partial property rights while private housing issold with full property rights, and tenure decision is somewhat different in the publicand private housing sector (Davis, 2003; Li, 2000). Using retrospective data, scholarsalso study the actual event of tenure change from rental to homeownership. Whilelife-cycle events such as the birth of a child are not important, change in maritalstatus, Chinese Communist Party membership, high position in the Party, governmentorganisations or state-owned enterprises, and job seniority encourage tenure changefrom rental to ownership (Huang, 2004; Li & Li, 2006; Li & Yi, 2007a). Zheng(2007) also studied tenure choice in China from the economic perspective.

The second related body of literature is on second homeownership, yet it remainsseparated from the traditional ‘housing’ research. Since Coppock’s edited volumein 1977, most research on second home derives from leisure and tourism studies,rural studies, and planning and cultural studies (Coppock, 1977; Gallent et al., 2005;Hall, 2005; Hall & Muller, 2004; Hettinger, 2005). Owning a second home is oftenconsidered to facilitate households’ leisure/recreational activities, and to compensateservices that their primary home lacks (Davies & O’Farrell, 1981; Tress, 2002).Second homes, especially those in a foreign environment, also offer households anopportunity to escape from their everyday routine (Chaplin, 1999). Rising disposableincome, widespread car ownership, changing lifestyle, retirement migration, counter-urbanisation and growing dissatisfaction with the ‘urban’ environment are consideredreasons for the growing second homeownership (Coppock, 1977; Robinson, 1990;Butler, 1998; Paris, 2006).

Investment is another important motivation for people to own second homes. Manyscholars have argued that purchasing second homes is part of people’s life-courseplanning and personal/family investment strategies (Coppock, 1977, Hall & Muller,



2004; Gallent et al., 2005; Smith, 2005). Households’ social economic status, hous-ing markets and macro-financial policies are considered as important factors. Withgrowing mobility (both personal and of financial assets), there has been a massive ex-pansion of leisure-related investment and consumption (Forrest, 2005). Furthermore,with increasing globalisation and rising transnationalism, there has been an increasingshare of population who live and/or work in two or more places. Improved access totransportation and communication due to globalisation facilitates second homeown-ership (Kaltenborn, 1998). Regional disparities in economy and housing market alsoencourage second homeownership, especially cross-border second homeownership,such as Hong Kong residents owning a second home in mainland China (Hui & Yu,2009). The high transaction cost and long duration in housing traction also contributeto ownership of multiple homes (DiPasquale & Wheaton, 1996).

Despite the rapid growth, the phenomenon of multiple homes in China is still at itsearly stage and research has been sketchy. Increasing social stratification, paid leisuretime, change in life-style, and the recent housing reform all drive the developmentof multiple home phenomenon (Feng & Liu, 2000). Feng and Zhou (2004) foundabout 23.7 per cent of households in Beijing occupied multiple homes in 2002,while Huang and Yi (2009) found about 12 per cent of all urban households inChina had multiple home occupancy in 2005. The most important reason for peopleto own additional homes is housing allocation from the work-unit (26.6 per cent),followed by additional homes close to the workplace (21.9 per cent), unsatisfactoryliving environment of the first residence (20.7 per cent), inheritance from parents andrelatives (14.2 per cent,), investment (7.1 per cent) and housing subsidies from workunits during housing reform (9.5 per cent). In Haikou (Hainan Island), which hasexperienced a speculative real estate boom, multiple home consumption emerged ina real estate burst, and was actively promoted by the local government as a strategy tostabilise the housing market (Wang, 2006; Xia, 2001). Yet, holiday-oriented secondhomes are emerging in resort cities such as Haikou and Sanyan on Hainan Islandand in big cities, including Beijing (Xu & Bao, 2006a, 2006b; Wang, 2006; Feng &Zhou, 2004).

Research on the relationship between primary and second homeownership is verylimited. Zhu (2009) argues that owning a second home does not necessarily reduce theconsumption of primary homes, as owning a second home is considered one way ofimproving housing consumption, while Belsky et al. (2006) argue the opposite. Thispaper attempts to contribute to the literature by examining the combined consumptionof and tenure decision-making for multiple homes.

A Conceptual Framework

Due to the transitional nature of the housing system in Chinese cities, households areconstrained by a different set of factors from the West, thus their housing decisionshave to be understood in a different conceptual framework (Figure 1). First of all,



Figure 1. The conceptual framework for the consumption and tenure choice of multiplehomes.

we argue that decisions regarding whether to have multiple homes and what kind oftenure to have for multiple homes have to be understood together as they are closelyintertwined. After years of housing reform, there has been a range of housing optionsfor different strata of households, including cheap rental housing (lian zu fang) andpublic rental housing with heavy subsidies, privatised public housing, economichousing (jingji shiyong fang) and housing with controlled prices and sizes (liang xianfang) that is private housing but with housing subsidies, various commodity housingby developers, and private housing by individual homeowners.7 On the one hand, howhouseholds access their housing often determines their tenure decision. For example,if households can access cheap rental housing or public housing by work units,they usually can only rent, while households can only own if they access economichousing, housing with controlled prices and sizes, and most commodity housing(State Council, 1998, No. 23)8. However, how households access their housing canalso affect their decision regarding whether to have an additional home. For example,university and government employees living in public rental housing that is notallowed to be purchased (the so-called ‘transit housing’ or zhou zhuan fang) oftenpurchase additional homes on the private market to enjoy homeownership and housingappreciation while living in subsidised housing. It is even common for people to buytheir second home first and then rent/buy their primary home. Thus the decision-making for primary and second home is not necessarily ordered temporally, andthey need to be examined together. Thus, instead of the binary option of owningand renting, there are in fact four options for households to choose from: renting a



one and only home; owning a one and only home; renting one home and owningadditional homes; or owning two or more homes. The tenure options are even morecomplicated if we consider the source of housing (pubic vs. private) and type ofproperty rights (full vs. partial property rights).

Next we argue that tenure choice of multiple homes in Chinese cities is con-strained by both socio-economic and institutional factors. After years of housing andeconomic reform, the housing stock has been privatised and a housing market isemerging. According to the 2005 Population Survey (1 per cent) conducted by theState Statistic Bureau, only 8.1 per cent of urban households live in public rentalhousing, and 24.4 per cent live in privatised public housing, while the rest (two-thirdsof urban households) live in various types of private housing. Thus it should not besurprising that life-cycle and affordability, two main factors for tenure and secondhomeownership in the West, are important in Chinese cities. We hypothesise thatolder and married people, and larger and better-off households, are more likely toown than rent, and they are also more likely to occupy or own multiple homes.

Related to the life-cycle is the presence of school-age children and the uneven qual-ity and distribution of public schools. Chinese households increasingly purchase/rentadditional homes for their children to be able to attend superior public kindergartensand schools. Good education has traditionally been considered a main path for Chi-nese to move up the social ladder (Ho, 1962). With massive numbers of studentsfighting for very limited educational resources, many parents are determined to sendtheir children to the best schools starting from kindergartens to help their eventualentry to the top universities. Thus they need to purchase (or rent) a home close tokey kindergartens and schools so that they can avoid paying a large sum of moneycalled an ‘endorsement fee’ (zai zhu fei) or ‘school selection fee’ (ze xiao fei), andtheir children can attend schools nearby. While some households have to sell theirprevious home in order to buy/rent houses near key schools, many maintain multiplehomes either because they can afford to do so or they are constrained in selling theirprevious homes due to partial property rights. Thus, in addition to life-cycle, webelieve the unique school system in China contributes to the phenomenon of multiplehomes, and households with young school-age children are more likely to occupymultiple homes.

Another important socio-economic factor for multiple homeownership in China isgenerational transfer. In traditional Chinese culture, old generations are more willingand more likely to pass their real estate on to or provide housing services for theirchildren (Lee & Xiao, 1998). Since the housing reform, it is also common for parentsto contribute a substantial amount of money (e.g. pay the down-payment) to helptheir children purchase housing. In Guangzhou, parental support, supplemented withpersonal savings, is a more important source of funding in home purchase than a mort-gage (Lee & Xiao, 1998). Furthermore, when parents are in powerful positions thatallow them to access subsidised housing, they often help their children access sub-sidised housing, and thus attain homeownership and even multiple homeownership.



Thus we hypothesise that parents’ ability to access subsidised housing and achievehomeownership (financially and politically) has a positive effect on children’s home-ownership and multiple homeownership.

Despite the profound reform, socialist institutions persist in the housing system,thus they continue to shape housing behaviour. For example, the household registra-tion (hukou) system, although under reform, continues to be an important institutionthat prevents migrants with hukou registered elsewhere to access subsidised housingin cities (Wu, 2002; Cheng & Seldon, 1994). Even though many migrants have livedin cities for years,9 they continue to be considered as outsiders. Together with otherconstraints, such as limited access to medical and educational services, migrants areforced to live a ‘migratory’ life between destination cities and their home towns. Thusthey are less likely to own dwellings at destination cities. Meanwhile, rural migrantscontinue to have access to collectively owned land in home villages for housingconstruction (zhai ji di) as they are still registered in villages, and urban migrantsmay be entitled to subsidised housing in their home cities. It is not uncommon formigrants to rent or own a dwelling at the destination, and own another at the origin.We hypothesise that migrants with temporary hukou at the destination city are lesslikely to own than rent their homes in the cities, but are more likely to occupy multiplehomes.

In contrast with migrants’ disadvantaged position in the housing system, peoplewith high political status such as those with high job rank and Chinese Commu-nist Party membership continue to enjoy privileges in the transitional housing system(Huang & Clark, 2002; Li, 2003). Since Victor Nee’s market transition theory (1989),there has been a debate regarding the importance of political/redistributive powerto socio-economic attainment in transitional economy (e.g. Walder, 1995; Szelenyi,1983; Szelenyi and Kostello, 1996; Bian & Logan, 1996). In contrast to Nee’s hypoth-esis that political/redistributive power is gradually replaced by market mechanism(Nee, 1989), many scholars found the persistency of political power in resource ac-cess and allocation such as housing consumption (e.g. Logan et al., 1999; Li, 2000;Huang & Clark, 2002; Huang, 2004; Li & Li, 2006; Huang & Jiang, 2009). Here weextend the debate to the consumption of multiple homes. We hypothesise that peoplewith higher political status (measured with high job rank and party membership) aremore likely to own than rent, and more likely to occupy/own multiple homes.

Furthermore, despite the fact that the State Council announced the end of publichousing provision in 1998 (State Council, 1998), resourceful work units continue toprovide subsidised housing (rental or owned) to their employees. These subsidisedhousing also means convenience to many households, as they are often located closeto the workplace and/or schools. Thus it is common for people to own or rent sub-sidised housing and own additional homes from the private market. According to Fengand Zhou (2004), housing allocation from work units is the most important reasonfor people to own multiple homes. Furthermore, subsidised housing in the owningsector often offers partial property rights, which usually constrain households from



disposing of their housing freely. Thus we hypothesise that people affiliated withresourceful work units such as high-ranking work units, party/government organi-sations, and state institutions are more likely to own than rent, and more likely tooccupy/own multiple homes.

In summary, the dynamics for the consumption and ownership of multiple homesin Chinese cities are shaped by both socio-economic factors that are consistent withthe Western convention and institutional forces that are unique to China such as thehukou system, the socialist housing allocation system, and the continued provision ofsubsidised housing by work units. In the following section, we will empirically testabove hypotheses.

Empirical Analysis

The China General Social Survey (CGSS) 2005 is a national questionnaire sur-vey conducted by the Department of Sociology at Renmin University and theSurvey Research Centre at the Hong Kong University of Science and Technology(http://www.ust.hk/∼websosc/survey/gss e.html). Based on the 2000 census data, theCGSS used a stratified, multi-stage probability sampling technique (district/county– street, town/township – residents’ committee/village committee – household), andit sampled 10,000 households in 26 provinces and cities. Since the housing systemin rural areas is different from that in urban areas,10 we focus on the urban sam-ple and exclude suburban farmers who have agricultural hukou registered locally asthey can access collectively owned land for housing construction. We also excludedthose whose occupations are in agriculture. The interviewees are treated as householdheads for the following housing analysis. The final sample has 5,705 observations.In addition to basic socio-economic information, the survey also collects informationon current housing, such as tenure, floor size, housing structure, year of constructionand housing price/rent. Furthermore, it asks whether the household owns additionalhomes with partial or full rights elsewhere, and the number, floor size and value ofany additional homes. Thus CGSS 2005 gives us a good opportunity to study multiplehomeownership.

Descriptive Analysis

After years of housing reform, the rate of homeownership in Chinese cities is veryhigh, and the rate of multiple homeownership is also fairly high. In 2005, only 17.4 percent of urban households in China rented a one and only home, 70.4 per cent owneda one and only home, 5.1 per cent rented one home and owned additional homes,and 6.2 per cent owned two or more homes (Figure 2). In other words, more than 11per cent of all urban households (migrants included) occupied two or more homes(rented or owned), and about 83 per cent of all urban households owned at leastone home (including owned homes elsewhere). While the majority of households



Figure 2. Tenure structure in Chinese cities, 2005.

(88 per cent) who occupy multiple homes only have two, about 12 per cent occupythree or more homes. This paints a very different picture from the housing consump-tion in the 1980s when the rate of homeownership was about 20 per cent and few if anyhouseholds occupied multiple homes. The tenure structure is even more complicatedwhen we consider the source of housing (Table 1). Among those who had only onehome, more households lived in public rental than private rental (10.8 per cent vs. 6.5per cent); yet, much more homeowners had full property rights than partial propertyrights (58.7 per cent vs. 11.8 per cent). This shows a higher degree of privatisationin the owning sector than in the rental sector. Among those with multiple homes, itis interesting to note that households living in public rental (1.2 per cent) and ownedhomes with partial property rights (0.8 per cent) owned additional homes. In otherwords, recipients of housing subsidies occupied multiple homes, which would not beexpected in the West. In comparison, more households in the private sector (rental orowning) owned additional homes (3.8 per cent and 5.4 per cent).

According to Table 2, older and married people, and larger households were morelikely to own than rent one home. But people who rented one home and ownedadditional homes are the youngest (mean age 35.1), most likely to be single, yet havethe largest households. This is probably due to young migrants who are single but



Table 1. Housing consumption considering the number of homes, tenure, and housing.

Housing type %

One homePublic rental 10.8Private rental 6.5Owned with partial property rights 11.8Owned with full property rights 58.7Others 0.8

Multiple HomesPublic rental and owned additional homes 1.2Private rental and owned additional homes 3.8Owned with partial property rights, and owned additional homes 0.8Owned with full property rights, and owned additional homes 5.4Others, and owned additional homes 0.3

Total 100.1

Source: Calculated by authors using 2005 CGSS.

count family members back home as part of their household size. While the medianhousehold income in 2004 for owners and renters were the same, the mean incomeand standard deviation for owners were higher, indicating a wider income rangefor homeowners. People who owned multiple homes clearly had higher householdincome (median 24,500 and 30,000 yuan) than those who had only one dwelling.

Migrants’ temporary hukou status continues to be an important constraint for theirhousing consumption and housing choice. Both urban and rural migrants (migrantswith nonagricultural and agricultural hukou registered elsewhere, respectively) weremuch less likely to own one home than local urban residents (28.8 per cent and

Table 2. Household’s socio-economic indicators by tenure.

Rent one Own one Rent one home, Own twoand only and only own additional or more Total

home home homes homes Total N

Mean age 41.4 46.3 35.1 44.9 44.8 5657Household size (persons) 3.1 3.4 3.9 3.7 3.4 5657Marital status (%)

Single 28.5 54.1 11.4 6.0 100.0 719Married and others 16.0 73.5 4.2 6.3 100.0 4938

Household income in 2004 (yuan)Median 20000 20000 24500 30000 20000 5270Mean 24765 26487 37484 50650 28194Std deviation 31264 38030 45896 112172 45981




Table 3. Tenure structure by interviewee’s hukou status.

Rent one Own one Rent one home, Own twoand only and only own additional or more Total

% home home homes homes Total N

Urban migrants 40.2 28.8 24.4 6.6 100.0 316Rural migrants 34.1 21.6 39.7 4.7 100.0 232Local urban residents 15.2 76.1 2.3 6.3 100.0 5,084Others 56.0 28.0 12.0 4.0 100.0 25Total 17.6 71.0 5.1 6.3 100.0 5,657


21.6 per cent vs. 76.1 per cent) (Table 3). But migrants, especially rural ones, weremuch more likely to rent one home and own additional homes than local residents(24.4 per cent and 39.7 per cent vs. 2.3 per cent). This is related to their high mobility,but more importantly, their temporary hukou status in cities, which under the currenthukou system constrains their housing access especially to subsidised housing, thushinders their long-term settlement in cities. They are somewhat ‘forced’ to ownadditional homes back home for their eventual return. There is a small number ofbetter-off migrants who could afford to own multiple homes, and urban migrantswere slightly more likely to do so than rural migrants.

Despite three decades of market transition, people’s political power continues tobe important in housing access and tenure choice. According to Table 4, people withhigh administrative rank, high technical rank and people with Chinese CommunistParty (CCP) membership are more likely to own one unit, or own multiple homesthan those with no rank or party membership. For example, 77.0 per cent of thosewith deputy chu (fu chu ji)11 or higher administrative rank owned one unit, and 11.0per cent owned multiple homes, compared with only 67.8 per cent and 6.2 per centof those with no rank. In addition, 75.3 per cent party members owned one unit,8.9 per cent of them owned multiple homes, while less than 70 per cent of non-party members owned one unit, and only 5.8 per cent of non-party members ownedmultiple homes. CCP members seem to still hold privileged position after almostthree decades of reform. Furthermore, the type of work units is important to theconsumption and tenure decision of multiple homes. People who are affiliated withparty/government/state institutions (dang zheng jiguan, shiye danwei) and those instate-owned enterprises (SOEs) were less likely to rent a one and only home and morelikely to own homes than those in private/group enterprises and joint-venture/foreigncompanies (Table 5). While the latter were more likely to rent one home and ownadditional homes, the former were more likely to own one and only one home.In particular, those in party/government/state institutions and SOEs in monopolyindustry below provincial level were more likely to own multiple homes.



Tabl

e4.

Hou

sing

tenu

reby

inte

rvie

wee

’spo

litic

alst

atus

.

Ren

tone

and

Ow

non

ean

dR

ento

neho

me,

own

Ow

ntw

oor

Tota

l%

only

hom

eon

lyho

me

addi

tiona

lhom

esm

ore

hom

esO

ther

sTo

tal

N

Adm

inis

trat

ive

rank

∗

Dep

uty

Chu

&hi

gher

9.0

77.0

3.0

11.0

0.0

100.

010

0K

eji

&lo

wer

12.7

77.9

2.3

6.2

0.9

100.

030

8N

ora

nk20

.967

.84.

46.

20.

710

0.0

2960

Not

appl

icab

le14

.771

.67.

15.

70.

910

0.0

1663

Tech

nica

lran

k∗

Adv

ance

d&

high

er10

.677

.52.

19.

10.

710

0.0

329

Mid

dle

&ba

sic

15.8

70.9

4.4

7.9

1.0

100.

010

98N

ora

nk19

.568

.85.

65.

30.

810

0.0

3604

Part

ym

embe

rshi

p∗

Yes

11.7

75.3

3.5

8.9

0.6

100.

080

2N

o18

.469

.65.

35.

80.

910

0.0

4903

Tota

l18

.169

.85.

16.

10.

910

0.0

5031

Sour

ce:

Cal

cula

ted

byau

thor

sus

ing

2005

CG

SS.

∗ Chi

-squ

are

test

sign

ifica

ntat

0.00

1le

vel.



Tabl

e5.

Hou

sing

tenu

reby

inte

rvie

wee

’sw

ork

unit.

Ren

tone

and

Ow

non

ean

dR

ento

neho

me,

own

Ow

ntw

oor

Tota

lW

ork-

unit

type

(%)

only

hom

eon

lyho

me

addi

tiona

lhom

esm

ore

hom

esO

ther

sTo

tal

N

Part

y/go

vern

men

t/sta

tein

stitu

tions

atce

ntra

lor

prov

inci

alle

vel

14.6

72.4

3.8

7.6

1.6

100

185

Part

y/go

vern

men

t/sta

tein

stitu

tions

belo

wpr

ovin

cial

leve

l14

.874

.32.

37.

61

100

708

SOE

sin

mon

opol

yin

dust

ryat

cent

ralo

rpr

ovin

cial

leve

l11

.680

.53

4.3

0.6

100

164

SOE

sin

mon

opol

yin

dust

rybe

low

prov

inci

alle

vel

15.1

72.9

3.1

8.5

0.4

100

258

SOE

sin

non-

mon

opol

yin

dust

ry15

.477

.22.

24.

30.

810

015

73Pr

ivat

e/gr

oup

ente

rpri

ses

23.8

57.4

11.8

6.2

0.7

100

1344

Join

tven

ture

s/fo

reig

nco

mpa

ny27

.954

.19

7.4

1.6

100

122

Col

lect

ive-

owne

den

terp

rise

s18

722.

37.

40.

310

063

9

Tota

l18

.169

.95.

16.

10.

810

049

93

Sour

ce:

Cal

cula

ted

byau

thor

sus

ing

2005

CG

SS.



In summary, the consumption and tenure choice of multiple homes are related toboth socio-economic factors such as age, marital status, household size and householdincome, and institutional factors such as hukou status, job rank, party membership andwork-unit type. The above descriptive analysis generally supports our hypotheses.

Models

To statistically test our hypotheses, we conduct multiple binary logistic regressionson different types of tenure combination (rent a one and only home, own a one andonly home, rent one and own an additional home, own multiple homes). The indepen-dent variables include three sets. The first set is socio-economic variables, includinghousehold head’s age, age2, marital status, education (in years of schooling), occupa-tion, household size, household’s income in 2004, whether household has school-agechildren (<13),12 and a dummy variable indicating whether parents are heads (in theirwork units) or not (based on parents’ occupation). The last variable is included withthe assumption that parents in head positions have better access to housing, who maytransfer their housing to their children or facilitate their children’s housing accessand homeownership. Yet parents’ income/wealth is not available in the dataset, thusthe test for generational transfer hypothesis is limited to parents’ political power.These variables are used to test the life-cycle hypothesis, affordability hypothesisand generational transfer hypothesis. The second set of independent variables areinstitutional variables, including interviewee’s hukou status, party membership, jobrank (administrative and technical), and work-unit type. Due to small frequenciesfor people with high administrative rank, the different levels of administrative rankare combined, with a dummy variable indicating whether people have administrativerank or not. Spouse’s occupation (head or not in their work unit) is also included as ahousehold may access subsidised housing through spouse’s work units thus spouse’spolitical status is important too. These variables aim to test the hukou hypothesis,power conversion hypothesis and work-unit hypothesis. Furthermore, region (eastern,central and western) and city size (municipalities and provincial capitals vs. othercities) are included to control contextual effects of local housing markets and housingpolicies. Descriptive statistics for independent variables are listed in Table 6.

Regression results are listed in Table 7 and the models are significant. First ofall, married, larger and better-off households were more likely to be homeowners inany of the three tenure combinations (own a one and only home, rent one and ownadditional homes, own multiple homes) than renting a one and only home, supportingthe life-cycle and affordability hypothesis. People who themselves or whose parentsare in leading positions were more likely to own multiple homes than renting a oneand only home, supporting the affordability and generational transfer hypothesis.Surprisingly, education was not significant, although coefficients had positive signs.Second, migrants (urban and rural) were much more likely to rent one home and ownadditional homes, but less likely to own one or multiple homes than renting a one and



Table 6. Descriptive statistics of independent variables in models.

Mean Std dev. %

Age 44.74 15.50Marital status

Married and others 87.46Single 12.54

Education (years of schooling) 9.83 3.94Occupation

Head/manager 2.30Professional 16.20Clerical worker 11.20Sales or service worker 20.30Manual worker 40.00Others & no employment 10.00

Household size 3.43 1.57Households with children <13 years old 32.60Household income (1,000 yuan) 28.21 45.92Parents are in leading position in their work unit 3.30Hukou status

Local urban residents 89.80Urban migrants 5.60Rural migrants 4.20

Administrative rankHave ranks 8.10No rank or not applicable 91.90

Technical rankMiddle or higher rank 21.10Basic level rank 7.30No rank or not applicable 71.60

Spouse is head 1.70Work-unit type

Party/government/state institutions at central or provincial level 3.71Party/government/state institutions below provincial level 14.18SEOs in monopoly industry at central or provincial level 3.28SEOs in monopoly industry at below provincial level 5.17SOEs in non-monopoly industries 31.50Private/group enterprises 26.92Joint ventures/foreign company 2.44Collective-owned enterprises 12.80

RegionEastern 50.40Central 27.40Western 22.20

City typeMunicipality & provincial capital 43.40



Table 7. Coefficients from multiple binary logistic regressions on housing tenure (reference:rent one and only home).

Own a one Rent one and Ownand only own additional multiple

home homes homes

Socio-economic variablesAge −0.038 −0.019 −0.048Age2 0.001∗∗ 0.001 0.001Marital status (reference: single) 0.747∗∗∗ 0.522 0.942∗∗Education (years) 0.028 0.019 0.009Occupation (reference: manufacture workers)

Head/manager 0.612 0.821 2.192∗∗∗Technician/professional 0.047 −0.446 0.045Staff and clerical worker 0.072 −0.508 0.304Service and sales worker −0.131 −0.542∗∗ 0.157Others & no employment −0.152 −0.21 −0.169

Household size 0.223∗∗∗ 0.356∗∗∗ 0.249∗∗∗Household income in 2004 0.006∗∗∗ 0.009∗∗∗ 0.014∗∗∗Parents are head (reference: no) 0.127 0.758 0.838∗∗Having children <13 years old (reference: no) −0.17 −0.299 0.018

Institutional variablesHukou (reference: local residents)

Urban migrants −1.811∗∗∗ 1.277∗∗∗ −1.283∗∗∗Rural migrants −2.018∗∗∗ 1.865∗∗∗ −1.48∗∗∗

Administrative rank (reference: no rank) −0.012 −0.008 −0.405Technical rank (reference: no rank)

Middle or higher rank −0.258 −0.071 −0.529Basic level rank −0.101 −0.045 −0.638∗∗∗

Spouse is head (reference: no) 0.015 0.643 0.537Party membership (reference: no) 0.033 0.424 0.318Work unit (reference SOEs in non-monopoly industry)

Party/government/state institutions at central orprovincial level

−0.061 0.403 0.45

Party/government/state institutions below provinciallevel

0.017 −0.266 0.208

SOEs in monopoly industry at central or provincial level −0.017 −0.236 −0.219SOEs in monopoly industry below provincial level −0.091 0.168 0.175Private/group enterprises −0.212 0.293 0.092Joint ventures/foreign company −0.414 0.034 −0.261Collective-owned enterprises −0.172 −0.486 0.356

Contextual variableRegion (reference: Eastern)

Central 0.833∗∗∗ 0.831∗∗∗ −0.009Western 0.541∗∗∗ 0.705∗∗∗ −0.602∗∗

City type (reference: others)Municipality and provincial capital −0.629∗∗∗ −0.232 −1.39∗∗∗

Constant 0.467 −3.006∗∗ −1.478Sample 3961 1017 1080Chi-square 526.484∗∗∗ 221.603∗∗∗ 251.879∗∗∗−2 log likelihood 3472.94 819.61 973.628Cox & Snell R square 0.124 0.196 0.208Nagelkerke R square 0.196 0.306 0.307



only home. This strongly supports the hukou hypothesis. Surprisingly, administrativerank, technical rank, party membership and spouse’s head position in their work unitwere not significant; yet the signs of the coefficients indicate that people with high jobranks seemed to be more likely to rent a one and only home, while party members andthose with a spouse in head positions are more likely to be in any of the three typesof ownership than renting a one and only home. These results only weakly supportthe power conversion hypothesis. The effect of work units is not significant either;yet, people in party/government/state institutions, SOEs in monopoly industry belowprovincial level, and private/group and collective enterprises were more likely to ownmultiple homes (positive coefficients) than those in SOEs non-monopoly industry.Furthermore, households in central and western China are more likely to own onehome, and rent one and own additional homes than renting a one and only home, yetthey are less likely to own multiple homes than those in eastern China. This shows thatit is relatively easy to achieve homeownership in central and western China probablydue to lower housing prices than eastern China. Yet, multiple homeownership ishigher in the eastern region as wealthy households who can afford multiple homesare concentrated in that area, where economic growth is the fastest. In addition,households in municipalities and provincial capitals were less likely to have any ofthe three types of ownership than renting a one and only home, probably due to higherhousing prices in large cities.

Conclusions and Policy Implications

China is becoming a nation of homeowners with more than 80 per cent of urbanhouseholds owning their homes and almost universal homeownership in the country-side. Due to the transitional nature of the housing system, tenure structure in Chinesecities is very complex, with rental in both the public and private sector, and home-ownership with full and partial rights. The emerging multiple home consumption andownership further complicates the tenure structure in transitional Chinese cities. Weargue that the number of homes households have and the tenure of their multiplehomes are two intertwined and inseparable decisions that make up their ‘housingportfolio’. Thus, instead of studying tenure choice of primary home and whetherhouseholds own second homes separately, as most existing housing studies do, thispaper attempts to understand the patterns and tenure choice of multiple homes inChinese cities. We proposed a conceptual framework that features a dual mechanismof consumption and tenure decision of multiple homes with both socio-economic andinstitutional determinants. Hypotheses on the effect of the life-cycle, affordability,generational transfer and the effect of the hukou system, work units and politicalstatus are derived from the framework, which are then tested through the empiricalanalysis.

Using the 2005 China General Social Survey, the empirical analysis shows thatmore than 11 per cent of urban households occupied (rent or own) multiple homes



and about 83 per cent of urban households owned at least one home. The roles of life-cycle and affordability are similar to the West, as married people, heads/managers,large households and households with higher income are more likely to own thanrent, and own multiple homes. The generational transfer hypothesis is also supportedbut has an institutional twist as people with parents in head positions are more likelyto occupy and own multiple homes. Besides parents’ monetary transfer, parentsmay access subsidised housing due to their high political status and thus can helptheir children to achieve homeownership or multiple homeownership. The role ofinstitutional factors turns out to be mixed. On the one hand, the hukou system isproven again to be important to tenure choice. Migrants are less likely to own one ormultiple homes than renting, but are more likely to rent one home and own additionalhomes than local residents, which supports the hukou hypothesis. On the other hand,the effects of work units and political status are relatively weak, providing someevidences for the market transition hypothesis offered by Victor Nee (1989).

The consumption of multiple homes in Chinese cities on the one hand demon-strates improved housing condition resulted from housing and economic reform,but on the other hand indicates increasingly severe housing inequality in a previ-ously relatively homogeneous society. As the Chinese government is struggling toprovide decent housing to the largest and most rapidly growing urban populationin the world, understanding the consumption of multiple homes is as important asstudying low-income housing in Chinese cities, which has important policy impli-cations. In addition to maturing housing markets and increasingly high income, thephenomenon of multiple homes is, unfortunately, also an unintended consequence ofvarious government policies. For example, with the persistent hukou system, migrantscontinue to be excluded from accessing subsidised housing in Chinese cities despitetheir long-term residence in them. In 2007, the State Council recognised the need toimprove migrants’ housing condition for the first time in a national housing policydocument. Yet, employers, instead of municipal governments, were encouraged tobuild housing for migrants. Furthermore, migrants’ housing is for rental only, andhomeownership is not allowed (State Council, 2007), which is in contrast to variousefforts by the government to encourage homeownership among urban households.Migrants’ peculiar position in cities leads to their renting one home at the destinationand owning additional homes at the origin. This tenure combination contradicts withthe original intention of limiting migrants’ access to subsidised housing in cities, andwastes land and housing resources. Policy makers are studying alternative housingprovision system to migrants. One possibility is that migrants can exchange theirrights to land and housing in origin for their rights to access subsidised housing indestination cities (Ni, 2008). If implemented, this policy should reduce migrants’need to maintain two homes and facilitate their long-term settlement in destinationcities.

Another example is the continuing provision of subsidised housing in Chinesecities, which often goes to the privileged urban households and encourages the



consumption of multiple homes. On the one hand, despite the official end of publichousing provision in 1998 (State Council, 1998), resourceful work units such asparty/government/state institutions continue to provide subsidised housing to theiremployees, many of whom have already accessed homeownership through housingmarkets. This leads to the tenure combination of renting one and owning additionalhomes. On the other hand, to encourage homeownership, both public and some privatehousing (e.g. economic housing) are sold with heavy subsidies and partial propertyrights, which constrain households to dispose of their housing freely. This alsoencourages the consumption of multiple homes. Thus, instead of helping low-incomehouseholds access decent housing and first homeownership, housing subsidies inChinese cities have helped privileged urban households to occupy and own multiplehomes. Further reform in housing subsidy access is also needed to ensure that peoplewho can afford homeownership do not occupy limited subsidised housing.

In addition, the fact that homeowners do not have to pay property tax in Chinesecities encourages the consumption of multiple homes. While households need to payvarious types of taxes and fees when they purchase and sell houses, they enjoy thewaiver of property tax and tax to use urban land if the house is for self-consumption(OCPAECMF, 2003, pp. 172–180). Thus it does not cost much to maintain multiplehomes once they are purchased while the appreciation of housing value has beensky rocking. It is not uncommon for better-off households to leave multiple apart-ments unoccupied, while low-income households do not have access to housing. Thegovernment and policy makers are studying the procedure and impact of collectingproperty tax in the near future, which may discourage the consumption of multiplehomes. Meanwhile, the Chinese government has been mainly using financial toolssuch as more down-payment and higher interest rate for mortgage13 than those forprimary residence to curtail housing speculation and consumption of multiple homes(CBC, 2007). Yet, it has not been very successful probably because using cash topurchase housing is still quite common in Chinese cities, especially among the newrich who are the main consumers of multiple homes. Thus it is prudent for the govern-ment to re-evaluate and reform related housing policies to avoid the concentrationof precious housing resources into the hands of a few while massive low-incomehouseholds have no access to housing. Furthermore, a better planning of public ser-vices such as schools may reduce the consumption of multiple homes. As housinginequality is increasingly becoming a social and political concern, properly regulatingthe consumption of multiple homes is as important as the provision of low-incomehousing to the poor.

Acknowledgements

This research is funded by a Visiting Research Fellowship by Peking University-Lincoln Institute Centre for Urban Development and Land Policy (PKU-LincolnCentre), a research grant in Humanities and Social Sciences by the Ministry of



Education in China (09YJC790276), and ‘211’ Key Project Funding by CentralUniversity of Finance and Economics in China. An earlier version of the paper waspresented at the ‘International Symposium on Housing Affordability and MarketStability’ in Beijing, China, 24–27 March 2009.

Notes

1. The rate of homeownership and per capita living space in 2007 is based on the 2007Urban Household Survey conducted by the National Statistical Bureau. It has 25,000households in cities and towns, including households with agricultural or nonagriculturalhukou registered locally, and migrant households with hukou registered elsewhere but havelived in cities/towns for more than 6 months (excluding migrants in collective housingsuch as dorms). The statistics for the 1980s are government estimations, which should bebased on local urban households only as there were very few migrants living in cities.

2. For example, existing public housing is sold to sitting tenants at heavily subsidised prices;monetary housing subsidies are provided to help households to purchase homes; mostprivate housing is for sale only; and the Housing Provident Fund, a mandatory housingsaving account with matching funds from work units, is established to help householdspurchase homes (State Council, 1998).

3. The rate of homeownership in the countryside is almost universal, as peasants are respon-sible for their own housing. They are allowed to build their own houses on collectivelyowned land.

4. Houses/apartments in China are sold with different bundles of property rights based onhow households accessed and purchased their homes. If households purchase their housesfrom the market and pay market prices, they enjoy ‘full property rights’ or ‘completeproperty rights’ which include right of occupancy, the right to extract financial benefits,the right to dispose through resale and the right to bequeath it to others (Davis, 2003).If households purchased previous public housing or private housing at subsidised pricessuch as economic housing (jingji shiyong fang), they have only ‘partial property rights’,which means homeowners only have the right of occupancy and use right, and they arenot allowed to sell their homes on the market for profit within the first 5 years unless theypay the gap between discounted and market prices.

5. The hukou system divides the Chinese population into four categories: those with agricul-tural hukou and registered locally (rural local residents), those with agricultural hukou butregistered elsewhere (rural migrants), those with non-agricultural hukou and registeredlocally (urban local residents), and those with non-agricultural hukou but registered else-where (urban migrants). Usually only urban local residents can access subsidised housingand other welfare benefits.

6. The 2000 Census is the first census that collected housing data, yet its micro-level dataare not available to the public except a handful of Chinese scholars.

7. ‘Cheap rental housing’ is heavily subsidised rental housing provided by the governmentand work units for the lowest income urban households (State Council, 1998). ‘Publicrental housing’ is subsidised housing provided also by the government and work units.Yet, its allocation is often based on a set of non-monetary factors such as job rank,seniority, marital status and family needs (Huang & Clark, 2002; Wang & Murie, 1999),



thus its tenants may come from different income groups. ‘Privatised public housing’is previously public rental housing sold to sitting tenants at lower than market prices.Because of subsidies during the sale, households often have so-called ‘partial propertyrights’, which constrains them from freely disposing and profiting from the housing.‘Economic housing’ is private housing with partial property rights, which is developedwith government subsidies (e.g. cheaper land) and sold at government controlled prices(developers are allowed to have only 3 per cent of profit rate) to urban low-medium-income households. ‘Housing with controlled prices and sizes’ is private housing withfull property rights, but with government controlled price and unit size (usually less than90 m2 floor space per unit), targeting the so-called ‘sandwiched households’ who are notqualified for economic housing yet cannot afford commodity housing. Household incomeand more recently wealth and existing housing condition are used as qualification foraccessing ‘economic housing’ and ‘housing with controlled prices and sizes’. Owners ofboth types of housing are not allowed to sell their housing within the first five years ofownership. If they have to sell within the first five years of ownership, the government hasthe priority to purchase back. If they sell after five years of ownership, they need to payadditional fees to compensate part of the subsidies they received (Beijing Low-incomeHousing Office, 2008). ‘Commodity housing’ is housing by developers sold at marketprices, with full property rights.

8. Only recently some cities are experimenting the practice of letting households rent eco-nomic housing. A very small share of commodity housing is for rent, targeting high-incomehouseholds.

9. According to the 2001 Chinese Urban Labour Survey, migrants’ mean duration of stay incities is 5.26 years, and some have stayed for more than 10 years (Connelly et al., 2007).

10. In the countryside, households build their own houses on collectively owned land, andthere are no government subsidies. Housing reform was launched only in Chinese cities.

11. According to the Law on Civil Servants in the People’s Republic China, civil servantsare divided into different administrative ranks. From the highest to the lowest, the ranksinclude Prime Minister, Ministry level (bu ji) cadre, Bureau level (si ji) cadre, Departmentlevel (chu ji) cadre, Division level (ke ji) cadre, division members, and ordinary clerks andstaff. With the exception of the last two ranks, each rank is further divided into regular(zheng) and deputy or vice (fu) level cadres.

12. We believe households with young children who attend kindergarten and elementaryschool especially need to live close to a school, while those who attend middle school orhigh school can often take buses or ride bikes to school themselves. Thus we use 13 yearsold as a cutting point to include children in kindergarten and elementary school.

13. While the government changes its policy on mortgage for second home constantly, ingeneral households need to pay at least 40 per cent of their mortgage for down-payment,and the interest rate for second-home mortgage is often 10 per cent higher than that forprimary residence (CBC, 2007).

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