Transitional dynamics and spatial convergence of house-price-to-income ratio in urban China

Employing distribution dynamics analysis, we examine the future spatial dynamics and convergence of the relative house-price-to-income ratio (RHPIR) across 171 major Chinese cities during the 2002-2016 period. We find that the convergence occurs at a slow pace and is heterogeneous across cities and periods. From the policymakers' perspective, our findings suggest that the policies implemented in China after the 2008 crisis to tackle housing unaffordability have been effective except for the least affordable housing markets of the four largest (first-tier) cities. Therefore, the housing markets in Shanghai, Beijing, Guangzhou, and Shenzhen require urgent policies to prevent the forecast growth in unaffordability and further divergence from other Chinese cities.