Housing Finance, House Value Appreciation, and Wealth Inequality in Transitional China

• In Event: Inequality, Poverty, and Mobility Section Roundtables
  In Refereed Roundtable (60 minute): 1. Perspectives on Inequality in China

Abstract

While research on wealth inequality in transitional societies has largely neglected financialized housing assets, studies on wealth inequality in the era of housing financialization have mainly examined how market capability shapes inequality through house value appreciation and housing finance. This study integrates these two lines of research to examine whether house value appreciation serves as a key mechanism through which both market capability and political capital generate wealth advantages, and how these advantages operate through housing finance as mediating pathways. Using data from the 2017 China Household Finance Survey (CHFS), the analysis shows that house value appreciation accounts for a substantial share of wealth inequality associated with education and public-sector employment, which represent market capability and political capital, respectively. Appreciation linked to these two factors is mediated by partly overlapping but distinct housing finance channels. Buying in high-tier cities is a common pathway, but higher educational attainment also confers advantages through the purchase of multiple properties, while public-sector households benefit from housing privatization before the sharp rise in house prices. These findings demonstrate how financialized housing markets intersect with state socialism to generate wealth inequality, underscoring the importance of institutional context in shaping the outcomes of financialization.

Author

• Zhi Li