The ladder of prosperity: An analysis of housing wealth accumulation across income groups in urban China

Housing has appreciated at a record pace in the 2010s in many countries, and increasingly accounts for a significant share of total household wealth. This paper investigates the disparities in the accumulation of housing wealth by exploring the relationship between income status and housing price appreciation. Drawing on data from the 2017 China Household Finance Survey, our findings reveal that lower-income households do not experience proportionate increases in housing wealth compared to their higher-income counterparts. This inequality has also been widened by multiple property ownership. Purchasing lower-valued homes does not explain the disparities in the housing price appreciation. Lower-income households are more likely to own low-quality homes, leading to smaller annual housing price appreciation. Lower-income homeowners are less likely to change their primary residence since they moved in. Trading-up strategies or frequent moving, which help to realise higher annualised price appreciation, are more likely to be deployed by high-income households. Meanwhile, lower-income households are less likely to use mortgage loans than higher-income households. However, this does not impede annual housing price appreciation. This paper also finds that the disparities in housing price appreciation among different income groups are particularly greater in higher-tier cities and in cities that implemented the housing purchase restriction policies, as housing prices are more spectacular in these types of cities. Moreover, the disparities can be greater among households that obtained their dwellings through the second-hand commercial housing market and the self-built housing market. These findings suggest that housing wealth may reinforce income inequalities. • Examining the disparities in the accumulation of housing wealth among low-income, middle-income and high-income households. • Exploring the differences in purchasing price, housing conditions, purchase period and mortgage take-up among different income groups. • Highlighting the fundamental shift of the primary function of a house from a place to live to an asset for investment. • Revealing the exacerbating effect of housing wealth gains on the wealth disparities among households with different income statuses.