Housing market of a medium-size city in China : A case of Xiamen

Abstract

China has experienced many changes since 1979 when the country embarked on a major economic reform. As one of the largest welfare sector, housing is the most important part of the economic restructuring process. After twenty years of experience, the welfare housing system has been changed and a new market-oriented housing system is growing. Along with these developments, a private housing market is now emerging in urban China. To date most studies focus on the theoretical characteristics of the newly housing market in China, little is known about the determinants of the consumersa?? choice in the emerging private housing market in contemporary China. Using data from a survey in Xiamen, this thesis aims to identify the consumersa?? choice behavior and to shed light on the housing reform and the formation of the new private housing market in a medium-size city in China. By looking at the consumersa?? perspective through the use of principal component analysis, the study finds three factors, namely, a??Physicala??; a??Living Environmenta??; a??Amenities and Financial Benefitsa?? best represent the image structure of the element of the private housing market in Xiamen, China. By adopting the discrete choice model, the nested logit model is found better than the multinomial logit model to fit the data. The analysis shows that the factors a??Physicala?? and a??Amenities and Financial Benefitsa?? have a stronger relationship with the choice than a??Living Environmenta??. Further analysis shows that Education Level is the most significant socioeconomic characteristic which influences respondentsa?? choice.