Dec. 16: Housing Production and the Structural Transformation of China’s Real Estate Development Industry

Abstract: “Housing is a major source of inequality. While extensive research exists on housing market outcomes like affordability and wealth disparities, studies on how housing is produced are limited. Much of the existing work focuses on regulatory barriers to development. Few have examined the role of the homebuilding industry in shaping housing market outcomes. This gap largely stems from a long-held assumption in housing economics: that homebuilding is a highly competitive sector that, if left alone, will produce whatever the market demands. As a result, the industry is often viewed as a passive actor in urban development process.

This study challenges this assumption. We argue that the structure and behaviors of the real estate development industry play important roles in shaping housing market outcomes.  This is especially salient in China, where the industry has become highly concentrated, with major developers controlling an increasing share of national housing production. Using mixed methods, this study examines the dynamics driving these structural changes in the Chinese real estate development industry, with a particular focus on how these changes have affected local housing production. Our findings reveal the changing nature of real estate development, how it has amplified risks in Chinese housing markets and contributed to the widening of regional inequality.”