Property Agents, Housing Markets and Housing Services in Transitional Urban China

Abstract

This study examines the particular role, services and functions of property agents in the housing markets in mainland China. Since the implementation of housing market reforms, cities on the Chinese mainland have transferred from a centrally-directed, welfare-oriented housing system to a more decentralized, market-based one. Commodification of housing has expanded the opportunity of new market intermediaries to service the growing urban housing markets. Yet there appears to be little research on these agents, which bear similarity in name, but not exactly in operation, to those in a market society. Based upon insights from new institutional economics, this study examines how the existing institutions in China have constrained and facilitated their services in the housing transaction process. This micro-analytical study provides a different means towards understanding the market transformation of a socialist housing system.

Keywords:

• Housing transaction
• institutions
• transitional economy

Acknowledgements

The authors are indebted to Raymond Rong Chen, Shi-hong He, Jeff Ruan, Mark Wang, Heagle Shen, Bin Long, Mark Pun and Sameul Zhou for their support in this fieldwork study in China. They also thank three anonymous referees for their constructive comments on the manuscript. An earlier version of this paper was presented at the Asia-Pacific Housing Network Research (APHNR) Conference 2005. We are grateful for the comments received from Bengt Turner, Ray Forrest, Friedemann Roy, Mattias Burell, Jian-ping Ye, Boris Portnov and other conference participants. All errors are the responsibilities of the authors. The Hong Kong Polytechnic University Research Grant (Project No. A-PD 39) has provided financial support for this study.

Notes

¹ Transaction costs have been defined in various ways. Arrow (1970) refers transaction costs to the costs of running the economic system. Williamson (1985, p. 19) expresses transaction costs as “the economic equivalent of friction in physical systems”. Transaction costs may include ex ante costs of searching, negotiating, specifying, measuring and securing a contract; and, ex post costs of monitoring, policing and enforcing a contractual agreement (Cheung, 1970; North, 1981; Rao, 2003).

² Transaction is all about the exchange of property rights (Coase, 1960). Williamson (1981, p.1544) suggests that a transaction is said to have occurred “when a good or service is transferred across technologically-separable interface”. Dixit (1996) defines transaction as an exchange of resources, assets of economic values, or reciprocal promises and action between the contracting parties in society.