Assessing Housing Affordability in Post-reform China: A Case Study of Shanghai

The scale and pace of change in Shanghai combine to provide a fascinating case study of affordability in a dynamic transitional market. This study has enhanced conventional indicators to capture more fully the different dimensions of affordability for new market entrants. Three dimensions of affordability are simulated (namely access, the burden of housing costs and housing-induced poverty) and two dynamic indicators are developed to simulate the experience of successive cohorts of market entrants. The 'point-of-entry' trend simulates changing affordability as each successive cohort of entrants first enters the housing market, while the 'cohort' trend identifies the evolution of affordability within each cohort after entry has been attained. While on average the 'point of entry' trend indicates a decline in affordability for each cohort of market entrants, the 'cohort' trend improves considerably within a short period of time, although there are differences between income groups. The findings have policy implications concerning the nature, extent and duration of housing subsidies for different income groups.