Housing prices, rural–urban migrants' settlement decisions and their regional differences in China. (December 2015)

• Record Type: Journal Article
• Authors: Zang, Bo; Lv, Ping; Warren, Clive M.J.
• Is Part Of: Habitat international. Volume 50(2015)
• Page Start: 149
• Page End: 159
• Publication Date: 2015-12
• Subjects: China -- Housing prices -- Rural–urban migrants -- Settlement decisions -- Regional differences; Human settlements -- Periodicals; 307
• DOI: 10.1016/j.habitatint.2015.08.003
• Languages: English
• ISSNs: 0197-3975

Abstract

Abstract: Rural–urban migrants are the major group who will boost the transformation of China's urbanization and reform of the household registration system. Their aspirations of living in the immigration area are an important premise of institutional change. The housing prices within the immigration areas are an important factor that can influence the rural–urban migrants' settlement decision. To what degree does the housing price influence the settlement decision? Do regional differences exist in the influence of house price? These issues need to be analyzed and verified in a theoretical and empirical ways. By introducing the variables of the housing price into the life-cycle theory function, we found that housing price influences the settlement decision through the welfare dissipation effect and the expected wealth effect. On the basis of welfare dissipation effect, hypothesis 1, we can come to the conclusion that high housing price will play a negative role in the process of settlement decision formation. Through expected wealth effect, hypothesis 2, we estimate that a housing price rise will promote the aspiration of living in the immigration area to some extent inversely. On this hypothesis basis, using the panel data model of China's 31 provinces and cities for the period 1995–2012, we found that, at the national level, the influence of housing price to the settlement decision is not significant. From the view of regional differences, the influence is negative in the eastern area, indicating that the welfare dissipation effect is greater than the expected wealth effect, in line with the hypothesis 1. The increase of housing prices will promote the settlement decision in the central area, this phenomena explains that the expected wealth effect is greater than the welfare dissipation effect, in line with the hypothesis 2. In the western area, the influence is non-significant. Highlights: Building a framework focusing on the relationship between the Hukou administrative system and urban housing price and presents critical arguments on the relationship. Proposing two hypotheses concerning the influence of housing price on the settlement decision: one is welfare dissipation effect, the other is expected wealth effect. Comparing the expected utility of living in the urban and the rural areas throughout the life cycle. Providing empirical support for the two hypotheses under the life cycle theory, taking into account regional differences within China. Conclusions are that the government should make regional differentiated policies with respect to urban housing prices.