Housing Price, Demographic Change and Government Subsidy: Evidence from Shenzhen

Shenzhen, a special economic zone with substantial proportion of migrant population, is facing mounting housing price pressure. While Hong Kong has often been quoted as one of the least affordable cities, Shenzhen seems to be... [ view full abstract ]

Shenzhen, a special economic zone with substantial proportion of migrant population, is facing mounting housing price pressure. While Hong Kong has often been quoted as one of the least affordable cities, Shenzhen seems to be overpassing its neighbor in the last a few years as indicated by its escalating price-to-income/rent ratios. Some well-known companies, i.e. Huawei, now have to move their production lines or R&D departments to Dongguan as they are less capable of accommodating the increasing housing subsidiaries for their employees. Whether heavy burden of living will impose negative impact on attracting creative and energetic new bloods to the city is worthy of further exploration. This paper investigates the relationship between demographic change and housing allowance provided by the Shenzhen government from 2012 to 2016. The impacts of two government sponsored recruitment/settlement plans for talents/migrants are evaluated, namely the Kongquejihua (literally Peacock Plan, particularly designed for the highly-educated) and the Baozhangfangjihua (literally the Guaranteed Housing Plan, designed for broader scope of recipients). The findings shed light on understanding the efficiency and equity of government subsidy for meeting the housing needs of different income bands, as well as the government’s role in shaping the city into a place of unity or division, integration or segregation.