Filtration Process Vacancy Chain Model-based Housing Market Research

Currently, it is well known that problems come out in the housing market of China, including the structural contradictions in supply and demand, and the affordability problems of low-income households. How to handle these hard problems has drawn broad attention from all works of life. According to the housing filtering theory proposed by western city economists, housing filtering process can be observed in the housing market. Had the filtering mechanism in housing market been properly made use of, the contradictions in supply and demand could be eased to a certain extent. Housing filtering is defined as a movement process that housing stock deteriorates and becomes less expensive with time, and moves from higher-income to lower-income households. Gradually, more and more Chinese scholars are aware of the potential contribution of applying housing filtering theory to resolve the structural contradictions in China's housing supply and demand. However, there are few empirical studies about housing filtering processes in cities of China because the market-oriented housing reform in domestic housing market is still very young, which has restricted the further application of housing filtering process. As a result, both theoretical and empirical studies about housing filtering processes in domestic housing market are very desirable.This thesis analyzes the effects of housing filtering process in the housing market of Hangzhou by investigating the phenomenon of households' moving, in other words, the phenomenon of vacancy transfer, based on a review on existing research about housing filtering theory and the status quo of Hangzhou's housing market. Furthermore, this thesis also compares the housing filtering processes of several housing submarkets of Hangzhou. From this study, some useful information is provided to better understand the housing market and is applicable to the housing policies analysis.Results of this thesis include three points:First, an empirical model of vacancy chain for Hangzhou is built, including a transition probability matrix and a transition multiplier matrix. Data is collected by conducting a thorough investigation on the changes of the houses' attributes before and after a household's moving. By taking into account the specific factors of vacancy disappearing in the housing market of Hangzhou, the economic implications of this empirical model are further analyzed. It lays the foundation for the accurate and scientific analysis of the effects of housing filtering phenomenon, and provides an idea and a scheme for future studies on housing filtering process using vacancy chain model.Second, the probabilities and multipliers of housing filtering between different levels in the model are used to do quantitative analysis of the effects of housing filtering in Hangzhou. The results show that the filtering of dwellings in the housing market of Hangzhou does not occur smoothly, and has not played a very good role. In addition, there should be a positive correlation between the quality level of a house and its filtering effect theoretically, that's to say, the higher of the quality level, the longer of its corresponding vacancy chain length, and higher level housing construction should be able to provide more opportunities for choice. However, empirical study on the housing market of Hangzhou reflects that this effect is in the lack of obvious. These research findings provide meaningful information for a government policy to stimulate filtering.Final but not least, this thesis compares the vacancy chain models of some income-differentiated housing submarkets of Hangzhou and their differences on housing filtering reflected. By specifically inspecting the movement of different income levels of families in housing filtering process, the differences in filtering of those housing submarkets are presented, thus, the availabilities of opportunity for choice can be compared among different income levels of families. These findings are referable when suggesting government policy to improve housing conditions of lower-income households, and also extend the scope and depth of research on filtering process.Empirical studies on the housing filtering process linked to vacancy chain model are still rare in China. To a certain extent, this thesis takes the nature of exploratory research. Limited by the availability of data, the scope of this study is only narrowed to owner occupied dwellings in the housing market of Hangzhou. In future study, data collection, extensions of the model and its explanatory can be further improved, so that the housing filtering theory and its empirical application in domestic housing market are promoted to a new level.