The Road to Homeownership: A Longitudinal Analysis of Tenure Transition in Urban China (1949±94)*

Since 1978, China has embarked on the ambitious transition from a planned economy toward a market economy, which has resulted in profound changes in every aspect of the society, including the provision and consumption of housing. With privatization in the housing system and the emergence of a housing market, the rate of homeownership in urban China has sky-rocketed from around 20% in the 1980s to 46% in 1996 (Huang and Clark, 2002) and to 72% in 2000 according to the 2000 Census. Because of the predominance in the public rental housing sector before housing reform, most homeowners in urban China are first-time buyers. Tenure transition from rental to first homeownership is considered in the Western literature to be one of the most important life events, and it has generated a large body of literature. However, the existing literature focuses on tenure change in market economies where the freedom of housing choice is usually granted and homeownership is encouraged and rewarded. Tenure change in both the socialist and transitional economies is poorly understood. It is the goal of this article to examine the pattern and dynamics of tenure change in urban China, a socialist society in transition. In socialist Chinese cities, housing was considered a welfare benefit and public rental was the dominant housing tenure. Privately owned housing, however, has always been an integral part of the housing stock, especially in inner cities, despite the socialist transformation of private housing and the extensive construction of public housing during the socialist era. The recent housing reform in urban China, launched nationwide in 1988, aims to transform the welfare-oriented housing system into a market-oriented system through privatization (Tolley, 1991; Wang and Murie, 1999; Huang and Clark, 2002). Homeownership has been highly promoted through the sale of public housing and private housing provided by developers. Most urban households in China are being given the opportunity to own their flats/houses for the first time. Due to decades of suppression of homeownership and the recent promotions, the urban Chinese have been embracing this opportunity, and a class of homeowners is emerging. Despite profound changes in housing consumption, there is a relatively small but growing body of literature on housing behavior in urban China (e.g. Logan et al., 1999; Li, 2000a; 2000b; Huang and Clark 2002; Huang, 2003a; 2003b; Wang and Li, 2004); yet, most studies focus on the reform era, with little attention being paid to housing behavior in the socialist era, and its change over time. Using a longitudinal survey dataset and the method of event history analysis, this article examines the transition from rental to first homeownership in urban China during 1949±94, a period which covers both the socialist (1949±87) and the early stage of Volume 28.4 December 2004 774±95 International Journal of Urban and Regional Research