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Housing affordability in Beijing 275 International Journal of Housing Markets and Analysis Vol. 1 No. 3, 2008 pp. 275-287 # Emerald Group Publishing Limited 1753-8270 DOI 10.1108/17538270810895114 Challenges facing housing affordability in Beijing in the twenty-first century Liu Mengjie Faculty of Architecture, Building and Planning, University of Melbourne, Melbourne, Australia Richard Reed School of Architecture and Building, Faculty of Science and Technology, Deakin University, Melbourne, Australia, and Hao Wu Faculty of Architecture, Building and Planning, University of Melbourne, Melbourne, Australia Abstract Purpose – The purpose of this paper is analyse to what extent the high price had led to low levels of housing affordability in the period 2002-2006 in Beijing. Due to the importance of housing for local residents and the crucial position that real estate market in the Chinese economy is currently in, research into the housing affordability issues is now essential. It is important to consider the social circumstances that are predominantly related to both the standard of living and the national economy in Beijing. Design/methodology/approach – The housing price to income ratio (PIR) method and Housing Affordability Index (HAI) model are used to measure housing affordability in Beijing. Then, the reasons for the high housing prices in Beijing are discussed and government homeownership- oriented policies to help citizen on housing issues are examined. Finally, future proposals which can contribute to ease the housing affordability problem are recommended. Findings – The main findings in this research are that the PIR in the Beijing housing market (based on an average gross floor area of 60 m 2 ) fluctuated between 6.69 and 9.12, respectively, between 2002 and 2006. Over the same period, the HAI was approximately 75 between 2002 and 2004, although decreasing sharply in 2005 (65.78) and 2006 (51.33). It appears that the Chinese government’s new housing provision policies may be able to ease this affordability problem, especially with regards to the economic housing scheme. Originality/value – China has experienced rapid growth in gross domestic product (GDP) with a substantial increase in house prices which have affected housing affordability for typical Beijing households. Since the housing reform in China commenced in 1998, Beijing residents, government officers and academics have been concerned about high housing prices in the city, which is considered beyond the buying capability of the ordinary residents. The results are designed to provide an insight into the level of housing affordability in Beijing and whether a trend exists. Keywords Housing, China, Government policy, Property finance, Real estate Paper type Research paper Introduction China has experienced rapid economic growth over the past two decades, which has also been accompanied by rapid development in the real estate market. A substantial change in central government housing policy was the transition from the old system of
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Challenges_facing - The current issue and full text archive...

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