Social Sciences History Seminar

Abstract: This paper investigates the impact of the shantytown renovation program with cash-based resettlement during 2015-18 on the housing market in China. As the program involves cash compensation to displaced households and land redevelopment, it increases both housing demand and supply. However, demand increases for both local and external markets as money flows to other cities not only through existing migration network but also by increasing additional household intercity migration, typically from lower- to top- tier cities, while supply only increases in the local market. Cities conducting the program ended up with lower housing prices and more severe supply overhang while those receiving the migrants experienced higher housing price growth, lower inventory and more housing speculation. The quantitative spatial model shows that money flow enlarges the gap in housing price growth from 2015 to 2020 between top- and lower-tier cities by 11.1%.