The inception of housing pathways in urban China: the declining household formation of young adults from 2011 to 2017

ABSTRACT

The homeownership rate of young adults has surged to an unprecedented level in urban China, despite rising housing prices and significant rural-urban migration. A trend analysis of nationally representative microdata shows that household formation is the missing link in the paradox and that many young adults aged 18–44 have failed to form independent households from 2011 to 2017, thereby delaying the start of their housing pathways. When factors such as socioeconomic and institutional attributes are controlled for, age differences in household formation decrease as expected. However, the age differences grow surprisingly larger over the study period, reflective of reform-induced changes in resource allocation. Further analysis demonstrates significant heterogeneity in headship status. While local young adults are squeezing into homeownership, migrants are overrepresented in the relatively stunted rental sector. Thus, while migration has brought newcomers to urban China and kept the headship rates from falling even further, institutional barriers have blocked migrants’ housing pathways. Overall, the pace of change is breathtaking. There is a growing divergence in young adults’ housing pathways, which depends on the timing of market entry, institutional attributes, housing prices, and personal income.

KEYWORDS:

• Household formation
• headship rates
• young adults
• migration
• institutional barriers
• housing pathways

Acknowledgements

This work was in part supported by The National Science Foundation of China (grant number 72174220), and a research grant in Humanities and Social Sciences by the Ministry of Education in China [grant number 21YJAZH104].

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 The housing pathway is defined in Clapham’s (2005) work, and indicates an interest in ‘the patterns of interactions concerning house and home, over time and different localities’, which aims to build upon the idea of the housing career (p. 27). See Clapham, 2005; Hirayama, 2010; and Hochstenbach & Boterman, 2015 for a larger discussion on the housing pathway.

2 Although it would have been possible to run more interactions, since age progression is our main focus we include only one.

3 In case an individual owns multiple housing units, we use the primary residence.

4 The headship patterns of 2013 and 2015 are consistent with the trend. Due to smaller intervals, the changes are also smaller.

5 The simulation results are available upon request.