The Impacts that Changes in Property Prices Have on Urbanization in China

Yong-Le LI, An-Yuan DAI, Si-Qi Yan, Qun WU


Urbanization in China has accelerated considerably over the last 3 decades. However, the level of urbanization in China is still relatively low compared with that in developed countries, and the growth rate of urban population was significantly lower than the rate of urban expansion. A major factor that can significantly limit rural-urban migration and slow down the pace of urbanization in China is high housing price. This paper investigates the effects of property prices on urbanization in China. We first establish a theoretical framework for the analysis of the impacts that property prices have on urbanization. We then estimate the model of urbanization using data for the 28 province-level divisions for the period 2001-2009. The findings suggest that different types of property prices have different impacts on urbanization, and the impacts vary across time periods and regions. Housing prices did not significantly influence urbanization rate in the period 2001- 2005. However, housing prices has a negative and statistically significant impact on urbanization rate in the period 2005-2009. Commercial property price generally has a positive impact on urbanization rate. The effects of industrial property price on urbanization rate vary across time periods and regions, and the effects are generally not statistically significant.


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