J Hous and the Built Environ DOI 10.1007/s10901-013-9363-4 ARTICLE

Affordability of housing and accessibility of public services: evaluation of housing programs in Beijing Zan Yang • Chengdong Yi • Wei Zhang • Chun Zhang

Received: 25 May 2012 / Accepted: 12 June 2013 Ó Springer Science+Business Media Dordrecht 2013

Abstract Acute housing poverty and low housing affordability among low-to-mediumincome households have become challenges in the pursuit of a harmonious society in China. Promoting housing subsidies and stimulating investment on affordable housing have been at the center of China’s housing policy. This paper analyzes the correlation of affordable housing program in Beijing with household affordability of adequate housing and accessibility to public services, which include elementary and middle schools, hospitals and public transportation. Economic and Comfortable Housing is studied based on unique database of eligible household and affordable housing projects. We find that the program fails to make housing affordable and accessible for eligible households. The implications of housing policy design in the context of the economic and social well-being of targeted households are highlighted in the study. Keywords Housing affordability
Accessibility
Economic and Comfortable Housing
Household well-being
Beijing

Z. Yang (&)
W. Zhang Tsinghua-Hang Lung Center for Real Estate Studies, Tsinghua University, Beijing 100084, People’s Republic of China e-mail: [email protected] Z. Yang
W. Zhang Department of Construction Management, Tsinghua University, Beijing 100084, People’s Republic of China C. Yi Department of Urban and Real Estate Management, Central University of Finance and Economics, Beijing 100081, People’s Republic of China C. Yi
C. Zhang Lincoln Institute Center for Urban Development and Land Policy, Peking University, Beijing 100871, People’s Republic of China C. Zhang School of Architecture and Design, Beijing Jiaotong University, Beijing 100044, People’s Republic of China

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1 Introduction Housing means more than just shelter, it also represents long-term wealth through which household’s economic and social well-being can be strengthened. For the low- and medium-income households in the subsidized housing, housing is not only a solution to their habitation problems, but also a solution for improving their life through its conjunction with public services, which impact on their opportunities in education, health and employment—the means to function effectively in society. Social function of affordable housing is very important because poverty of people is not simply due to the absence of financial resources; it is also because of a lack of the ability to function effectively in society (Sen 1992, 2001). Social support of affordable housing not only helps household get by in life, but also more importantly it helps them get ahead in life to improve their economic and social status (Curley 2005). The growing attention on the neighborhood effects and the economic outcomes of low- and medium-income households highlights the importance of the accessibility to public service in household’s life (Small and Newnam 2001; Curley 2005). The undertaking massive program of redevelopment affordable housing in the USA is also regarded as an effort to decrease poverty through housing spatial relationship to public amenities (Goetz 2012). In China, after more than a decade of market-oriented housing reform, housing policy currently is moving toward prompting affordable housing. In the turning point, year of 2010, 5.84 million additional units of subsidized housing were built nationally, resulting in a growth rate of about 50 % over 2009. In 2011, coinciding with the beginning of the 12th 5-year plan, the central government committed another 36 million units of affordable housing nationally over 5 years in an effort to subsidize 20 % of urban households in adequate housing. The increasing concerns about housing affordability reflect sustained rising housing prices (Yang and Shen 2008) as well as widening polarity between different cohorts (Yang and Wang 2011; Man 2011); affordable housing program is designed as a vehicle to mitigate income inequality and as a crucial channel to stimulate household consumption (Li 2011). These new assigned roles of affordable housing in China, similar to other industrialized countries, challenge affordable housing design in a wide array of social perspective, in which the household’s well-being is the center. Three decades of reform witness the remarkable economic improvement in China as well as exacerbating inequalities of urban households (Yang and Wang 2011; Wang and Liu 2004). The Gini ratio rose from 0.33 in 1995 (Gustafsson et al. 2008) to 0.425 in 2010.1 This widening income gap was accompanied with severe social stratification when the traditional link between welfare and working units is broken during the economic transition.2 Households who are suffered in economic problem also face serves in social deprivation and exclusion. Although prompting social security systems have been on the Chinese Government’s agenda in recent years, social support of government was still kept at the considerable low level. For example, according to the report of World Bank, in 2010, the public health expenditure on total government expenditure in China is only 12 %, ranked as 89th in total 245 statistical countries. The public education expenditure in China 1

Data source: http://data.worldbank.org/indicator/SI.POV.GINI?page=1 (Date of access: December 29, 2012).

2

Under the old economic system, more than 98 % of urban residents were employed by either the state or the collective sectors. They are all provided comprehensive welfare services, including job security, healthcare and education. After the economic marketization, welfare provision related to work units was reduced substantially in order to improve production efficiency (Wang and Liu 2004).

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is even lower. The prompting affordable housing thus stands up as an important platform for the low-to-medium-income households to resist their disadvantage social position relates to their access to public amenities. A well-designed housing program that effectively helps households find and access services can foster positive outcomes in household well-being and can be significantly integrated into whole social security system. Alternatively, low-income households might be put in an even worse situation and further widen economic disparity. The outcome may be even worse than that of the western countries if the housing program is not efficacious given the huge amount of affordable housing construction in China. In addition, it may also affect the economy worldwide due to the intensifying effects on economy from China to the world. It is difficult to provide comprehensive evaluation on housing policy in China because the affordable housing program is still evolving. However, this paper raised a considerable important issue on housing policy design in terms of integrating affordable housing supply with public services to maximize benefits to marginal families in affordable housing settings. Based on the unique dataset in the paper, this is the first paper that tests whether affordable programs in Beijing are designed to meet household needs concerning adequate housing and accessibility of public services including schools, hospitals and public transportation. This can significantly increase our knowledge on how housing policy options correlate with a family’s life prospects and how policymakers and developers can shape efforts to increase the supply of accessible and affordable housing for low-to-medium-income households. This paper also contributes to the current housing affordability study by emphasizing the opportunity costs of local amenities associated with affordable housing. It provides a way to take into account a wider range of factors that influence housing affordability, deviating from focusing exclusively on the housing cost as the principal determinant. This paper puts efforts on tackling housing affordability by considering the key role of accessibility to public services as an important factor of it given that the nature of housing is the foundation of household’s life. This study is organized into seven sections. After the introduction in Sect. 1, an overview of affordable housing policy in Beijing is provided in Sect. 2. Section 3 presents the theoretical framework for the affordability and accessibility analysis. Section 4 analyzes determination of household affordability and public service accessibility in the study. Section 5 is about information on data, and Sect. 6 discusses the results. Section 7 offers concluding remarks.

2 The development of affordable housing programs in Beijing 2.1 Urban housing system in the post-reform in Beijing In order to strengthen the role of the real estate sector and make it an effective driving force for nationwide economic development, in the 1990s, the Chinese central government launched market-oriented housing reform. The operation of the housing market was implemented step-by-step and involved several key processes: the commoditization of housing goods, the monetization of housing consumption, the marketization of housing allocation, the commercialization of housing provision and the privatization of public housing stock (Wang and Murie 1999; Zhao and Bourassa 2003). In 1998,3 governments 3

In July 1998, the new State Council issued an official document titled ‘‘The Resolution on Continuing Urban Housing System Reform, Accelerating Housing Development’’ (SC[1998]No. 23). It announced that

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vigorously encouraged residents either to purchase housing from the market or to buy their sitting public sector housing which owned by the state-owned enterprises (SOEs). For this purpose, certain policies were designed to offer public housing to origin tenants at considerable reduced cost, allowing them to purchase the property either at its direct construction cost or at a ‘‘standard price’’ determined based on the buyer’s income and years of employment. As a consequence, within a year and a half, more than 60 % of urban public housing was being sold to individuals, which associated with an implicit market value of approximately EUR 0.30 trillion in 1998 (Adams 2009). Because of its large number of state-owned enterprises, institutes and government departments, Beijing experienced more public housing privatization than any other Chinese cities. By year 2000, the housing ownership rate in Beijing has increased to 55.12 % from 30 % in 1992 (Statistical Bureau of Beijing 2005), which primarily due to housing privatization. Up to year 2009, total owner-occupied rate in Beijing is 76 % according to National Bureau of Statistics of China (NBSC 2010). Since housing reform, housing in urban areas is supplied in a diversified multi-level provision system including three major components:4 commodity housing, which are delivered by real estate developers and allocated by market rules; privatized public housing, which previously owned by a work unit and sold to their employees at discounted price; affordable housing, which targets on low- and medium-income households and are subsidized by the central and local government. 2.2 Affordable housing programs in Beijing As China’s political, economic and cultural center, Beijing is a strong magnet for both population and industry. Due to rapid industrialization and urbanization, the city’s population has reached 19.6 million as of 2010 (Statistical Bureau of Beijing 2011), and built-up urban areas have grown to 1,349.8 km2 since 2009 (NBSC 2009). In addition, there have been massive urban renewals, shantytown rebuilding and new town development. The increased demand for housing has resulted in higher housing prices, and corresponding higher housing prices have grown in Beijing at a rate faster than the national average. The average price for commodity housing increased 2.6 times from 2001 to 2009, while disposable income per capita increased only 2.4 times during the same period (NBSC 2010). This has created problems of low housing affordability and poor housing consumption, especially among low- and middle-income households. Severe housing problems are increasingly threatening economic stability in Beijing (Yang and Shen 2008; Yang and Wang 2011), and it is producing widening social stratification between different cohorts (Yang and Wang 2011; Man 2011). In August 2007, under social and political pressure, the Chinese Government again committed to meet the basic housing needs of low-income ‘‘house-poor’’ urban households by developing public housing (SC[2007]No.24). This signalled a turning point in Chinese post-reform housing history and essentially reversed the public housing trend, which had been downsliding since 1998. As the capital of China, Beijing offers all available affordable housing programs, including Cheap Rent Housing (CRH), Economic and Footnote 3 continued previous welfare housing distribution system would be formally abandoned at the end of 1998 and completely replaced by monetary distribution, implicating a full marketization stage in housing reform in China. 4

There is a small amount of housing called ‘‘self-built’’ housing which usually locates in rural areas, the periphery of urban cities.

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Fig. 1 Framework of affordable housing programs in Beijing

Comfortable Housing (ECH), Capped-Price Housing (CPH) and Public Rental Housing (PRH), which are described in the whole housing supply system in Fig. 1. While PRH has become a policy focus in China since 2009, in Beijing, it is still in its initial stage and only three PRH projects have been distributed to eligible households.5 Besides, there is still lack of regulation on rent level setting and eligible condition for PRH. CRH, which targets symbolically low-income households in Beijing, is kept at a low construction level.6 Hence, this study focuses on ECH, which is the largest amount of affordable housing supplied in Beijing so far. Moreover, the prompting of PRH does not suggest total abandoning owned affordable housing in the future, but a tool to improve the effectiveness of ECH or CRH (Yang and Chen 2013). The framework used in this study could further inform the use of practice guidelines across a wide spectrum of housing types including PRH. We also carried out analysis for CPH. Results are not shown to save the page. Unlike many western countries, in China, all affordable housing programs are funding mainly by local government but with limited and selective supporting from the central government. In Beijing, funding for affordable housing is mainly from the local government fiscal budget, 10 % of net proceedings from land granting, and loan from housing provident funds.7 In 2011, Beijing Government is given the permission to issue private debt and government bond to finance affordable housing construction. 5

Only 9 out of 35 designed Public Rental Housing projects have been started. (Source: Beijing Municipal Commission of Housing and Urban–Rural Development, Housing Security Office).

6

In 2009 and 2010, only 4,000 CRH units were built in Beijing. Since CRH targets the bottom low-income households with local registration in Beijing, the number of eligible households is rather limited in Beijing.

7

Public provident funds are deposits from employers and their employees’ one-for-one match saving for the purpose of housing consumption. In 2011, in the 28 pilot cities, the reserves on housing provident funds are required to be invested in PRH development (Ministry of Housing of Urban and Rural Development 2011).

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Household who are eligible for affordable housing can purchase affordable housing with mortgage at down payment of 20 % of the total value and 30 years loan maturity. Eligible people can also use their public provident funds which provide slight low level of interest rates compared to the mortgage rates in the commercial bank. 2.3 Economic and Comfortable Housing (ECH) and Capped-Price Housing (CPH) in Beijing The Beijing municipal government’s strategy began in 1993 with the Kangju (healthy living) project. The objective of that project was to improve living conditions for mediumand low-income groups and encourage the establishment of an Economic and Comfortable Housing supply system (Meng and Feng 2005). The target group was limited to workers in state-owned enterprises, and priority was given to retired workers and teaching staff. This project led to the nationwide Comfortable Housing Project (Anju Project) and was further revised into the Economic and Comfortable Housing Plan. ECH is encouraged by policies that include the free transfer of land and reductions or exemptions from taxes and levies. This makes the average price of ECH units lower than that of similar quality commercial housing. The ECH price is determined by the Ministry of Housing of Urban and Rural Development (MOHURD) and the National Development and Planning Committee. The general principle of ECH price determination is to cover construction costs and limit developer profits while making the housing to be affordable for medium-to-low-income households. Eligible candidates for ECH in Beijing require local resident registration and must meet the demarcation line standards for total income and total wealth. Their current living floor space per head must be below 10 m2, including self-owned and rental housing. The eligible conditions are specified in Table 1. When households purchased ECH before 2004, they could sell their own ECH immediately and compensate the authorities for 10 % of the land price [MC[1998]No.154]. Since then, after owning the economic housing and land-use permits for 5 years in Beijing, homeowners can list their ECH in commercial markets to local housing authorities after land tax, calculated as 70 % of the difference between the original and current market

Table 1 Eligibility conditions of applying for ECH in Beijing (2010) Eligibility conditions

Target group

Current living floor space per head

Annual household income (EUR)

Total household assets (EUR)

One-person household

Medium-to-lowincome households

10 m2

2,774

29,328

4,436

32,994

Three-person household

5,536

43,992

Four-person household

6,464

54,990

More than fiveperson household

7,332

58,656

Two-person household

Source: Beijing Municipal Commission of Housing and Urban–Rural Development

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prices, is duly paid [SC[2007]No.24]. ECH is only restricted in the sales market which means it cannot be let on the rental market. CPH was initiated in 2007 by the State Council as a new housing assistance program targeting mainly urban middle-income households. The program is also referred to as the dual-restriction commodity in which both selling price and apartment size are severely controlled. The price is set jointly by relevant local government departments, which consider the actual costs and reasonable developer profits. Generally, CPH profit is limited to 3–5 %, slightly higher than that of the comparable ECH and observably lower than the nearby ordinary commodity. The maximum size of a unit in CPH is limited to 90 m2 per unit, and CPH land is leased through tender auction in the market. CPH is more flexible than ECH with regard to household income and assets. Under CPH, priority is given to households with elderly or disabled people and households whose residences were demolished by urban upgrade projects. Only local registered households can buy CPH, and they have to meet certain conditions concerning income level and housing assets. Similar to ECH, after 5 years, CPH owners can sell their housing after land tax, calculated at 35 % of the difference between the original and market prices at selling time, is duly paid. 2.4 Cheap Rental Housing (CRH) and Public Rental Housing (PRH) CRH is state-owned housing property that leased at a symbolically low level of rent to meet the basic housing need of the bottom income group of urban population. State Council (SC[No.24]) required that households receiving Minimum Standard of Living Assistance (‘‘di bao’’) and meeting the criteria of housing difficulty should be 100 % covered by the CRH system in large and medium cities. CRH nominally can be provided to eligible households through in-kind distribution, frequently in the case of new housing projects at free land cost, and through rent deduction, usually for the sitting tenants of public housing. Rental allowance is also an instrument used to support eligible households if public housing is not readily available. The actual rent subsidy is determined by a set of factors such as per capita housing subsidy standard in the amount of floor space, household size, subsidy standard per month per square meter, and household income. Similar to ECH and CPH, eligible households who apply for CRH must met a certain number of criteria, such as local resident status, marital status, per capital income, unregulated as households in need of resettlement due to urban upgrading projects, or households with elderly or disabled members, can be given priority. Since 2007, several municipalities in eastern China, including Shenzhen, Xiamen and Changzhou, began to experiment small-scale Public Rental Housing program. In 2010, MOHURD and other seven departments jointly issued ‘‘the guideline to speed up the development of Public Rental Housing’’ and formally lifted PRH to a national scheme. Under the ‘‘guidance,’’ Public Rental Housing is mainly targeted at new migrants, new college graduates and urban middle-income needy households at subsidized rents. Different from CRH, PRH targets a much wider population-covered eligible family, and in many cities, including migrants. As PRH is still quite new to Beijing public housing system, its rules in terms of land supply, access criteria, rents determining and release policies are still not clearly formulated. Eligible households for PRH includes all eligible households for CRH, ECH and CPH, other low- and middle-income households with housing difficulties, migrants who have been working continuously and stably for a certain number of years in Beijing.

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3 Affordability and accessibility in affordable housing programs Housing market is characterized by natural monopoly, externalities and imperfect information and frictions. This leads to the rationality of government intervention on housing market and public support for low- and medium-income households. The importance of the role of state has been widely agreed in ensuring equity in housing consumption and increasing the affordable housing for low- and medium-income households toward the economic efficiency and social effectiveness (Lux 2003; Priemus 2003). The efficiency and effectiveness are the two fundamental criteria in welfare economics assessing the public subsidies. The efficiency is traditionally understood as the Pareto optimum, while effectiveness is referred to the degree to which the set goals of public policy are achieved (Priemus 2003; Lux 2003). Even both concepts are essentially technical in nature, they are rather difficult to be defined and identified, particularly in empirical analysis of housing policy that embodies multi-stakeholders. The perspectives of stakeholders and the aspired goals may result in a multi-dimensional array of possible variables; hence, a single criteria or goal is not acceptable (Rowe and Frewer 2004). In addition, trade-off in practical terms between efficient and effectiveness happens (Barr 1998), which leads the criteria used to assess public policy are rather difficult to be specified. However, it is generally agreed that an efficient and effective housing policy should be the one that targets toward the people most in need of assistance and reach their affordability (Lee 2007; Nordvik 2006). Household affordability is the main political justification for developing affordable housing (Whitehead 2003). It establishes a fundamental goal at which affordable housing policy should achieve. Housing affordability measures the ability and desire of consumers to pay for housing services that are the bundle of housing attributes. Among them, public amenities tied to the location of housing which in turn impact on the well-being of the households is particularly important. Opportunity costs due to housing location, such as accessibility to transportation, medical care and education, is important in the definition of affordability (Fisher et al. 2009). In principle, integrating costs for housing and related public services into affordability function indicate the household trade-off choice between total housing services and other expenditures as well as reflect the significant of the spatial implications of housing. Moreover, it provides a way to define housing affordability from a wide social perspective, which is critical to housing policy. The rationale for emphasizing affordable housing supply with public services is rooted in poverty. Poverty puts low-income households at greater risk of poor outcomes and has a meaningful impact on the financial, educational and emotional well-being of households (Tighe 2010). It is increasing recognized since Sen (1992) that household poor is not simply lacking of money, but also related to the society integration. As a part of income policy, housing policy aims to raise the income of low-income households, but as well as to improve household social status. A well-designed housing program that tackled to the wide welfare society can effectively help households to find and access services and hence can foster positive outcomes in overall well-being. Alternatively, low-income households might be put in an even worse situation. A growing number of studies denote that the absence of access to urban resources including facilities and services is an explanatory factor of poverty (Small and Newnam 2001). It is believed that the provision of public amenities can strengthen and improve residents’ economic and social well-being. They provide opportunities for career promotion and venues for daily activity to form and maintain social relationships. Access to public

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facilities could potentially impact more on the well-being of residents in low socioeconomic neighborhoods when compared with higher socioeconomic neighborhoods because of cost and mobility barriers to the use of private or non-local services (Talen 1998). Accessibility to public transportation services is one of the important issues for lowincome households (Lau and Chiu 2003). Given the dependence of low-income households on public vehicles, the convenience of that travel determines the quality of urban life and the accessibility of job opportunities, which are potential sources of income for those having limited employment opportunities. It is well documented that transportation hardships pose significant barriers to employment success (Blumenberg et al. 2002; Sanchez 2008). The importance of public service accessibility for affordable housing is also driven by spatial equity, a notion associated with the degree to which services or amenities are equally distributed across different economic and political groups. Compared to economically advantaged households, low-income households are limited to access public facilities which influenced substantially by the allocation policies of affordable housing. In the absence of government intervention, the allocation of dwellings is driven by ‘‘market forces’’ determined by the interactions of buyers and sellers, each with their own interests. In general, depending on affordability, households can make decisions based on housing size and other characteristics when choosing housing locations. This does not mean that market allocation always leads to equitable outcomes, but it does suggest that public provision and allocation of housing replace household choice with some forms of local government bureaucratic decision based on comprehensive consideration of expenditures and benefits. Building housing that is well serviced publically against the basic outlines of building affordable housing in affordable location (Talen and Koschinsky 2011). This could result in a desegregated urban poor area that has less-than-equal access to public services and facilities, including schools and heath care, and challenge sustainable local development in economic inequality. In China, spatial equity is further challenged by the significant disparate quality of schools. Though the key school system in China8 was abolished in the 1990s in accordance with the 9-year compulsory education policy, schools quality still maintain significant diversity (Feng and Lu 2010). Following the ‘‘by lots nearby school’’ policy, only those residents who live in the good quality school districts9 can enroll in the good schools. This benefit has been significantly capitalized into housing wealth (Feng and Lu 2010). Lowincome households are more likely to be excluded from good schools due to their limited housing affordability within the good school districts. In addition, good quality schools most likely open their doors to students who are able to pay much higher tuition and fees, despite the central and local governments’ attempts to provide equal education opportunities (Feng and Lu 2010). Again, students from poor households are deprived of the privilege of entering good quality schools. It is well known that education is the primary factor in forming human capital; it has a significantly positive effect on personal wealth and ultimately benefits family wealth. For a poor family, education is a crucial channel in poverty eradication and also important in shaping life in general. Under the Chinese education system, poor children tend to have numerous disadvantages in accessing better quality schools in relation to their better-off counterparts. 8

Beginning in early 1950s, the Chinese Government introduced the key public school concept, which was allocated with much more funding, better facilities and better teachers than ordinary schools.

9

There is no formal definition or division of school district. Residents are normally acknowledged when they apply to schools on behalf of their children.

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In China, the number of private schools is rather limited; in year 2010, according to the Educational Statistics Yearbook, the number of private primary schools is only 2 % of the total number of primarily schools and is 7 % in the junior schools. There is no official statistics on the fee of private school, but it was reported that in average, the cost of private school is 10 times higher than that of the public school.10 Similarly, the limited amount of private hospital11 also excludes the low- and medium-income from the private hospital. Normally no social insurance covers services in private hospitals. Many scholars who focus on low-income housing problems in China offer policy recommendations (e.g., Tian 1998; Yao 2003; Jia 2005; Ye et al. 2006; DRC of State Council 2010; Jia and Liu 2007). Several studies address the weaknesses of ECH due to its institutional and economic causes (see Rosen and Ross 2000; Wang 2000), price determination (Sun 2004; Duda et al. 2005) and distribution policy (Kang and Liu 2007). However, few solid empirical analyses are provided due to a lack of systematic data in China. This study aims to fill that gap by conducting an empirical analysis of household affordability and public service accessibility in Beijing based on geographical information systems (GIS) and unique datasets of eligible households.

4 Methodology: determining affordability and accessibility 4.1 Measures of housing affordability In this study, residual income approach is used in housing affordability measuring. It indicates that housing to be affordable if residual income, after subtracting the minimum cost of necessary non-housing goods and services, is adequate to cover the cost of an affordable dwelling, including the down payment and periodic debt service. This method highlights the relationships between income, housing costs and expenditures on nonhousing necessities, which are the three critical dimensions of housing affordability (Yang and Shen 2008). It is regarded as a proper method for the Chinese study (Yang and Shen 2008; Yang and Wang 2011). In the residual income approach, two major steps need to be specified. First, we need to assess the minimum required expenditures for non-housing consumption of the eligible households. In this paper, official poverty line of household determined by the Urban Living Standard Guarantee System (dibao) in Beijing is used to estimate non-housing consumption. The poverty line is based on a ‘‘cost of basic needs’’ covering basic cost of cloth, food, living and compulsory education and adjusted every few years by Beijing Civil Affairs Bureau according to the changes of CPI. On the second step, average total purchase prices of ECH are used to estimate the housing costs of eligible households. Given the total cost of ECH, we can estimate the down payment and annual debt service payment, respectively, based on the Chinese standard repayment loan. We can thus derive a minimum required budget that is the sum of expenditures for non-housing goods and the costs of ECH after taking financing costs into account. By comparing the eligible household’s actual income with minimum required

10 Data source: http://www.prcedu.com/news/xsc/zexiao/2010/1202/9657.html (Date of access: December 29, 2012). 11 According to the statistics of Center for Statistics Information Ministry of Health, only 9% of private hospitals exist in 2012 in China.

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budget estimated above, we are able to measure if ECH is affordable for the eligible households. 4.2 Determinates of accessibility Accessibility concerns the opportunity and eases that an individual at a given location possesses to participate in different activities. The concept was first brought into the urban planning field to measure interaction potential in 1959 and highlighted social equality issues such as the distribution of city facilities (Hansen 1959). Accessibility literally includes opportunities to use a variety of facilities and amenities that relate to the life quality of individuals. Among the extensive literature on accessibility, the most common approaches define ‘‘access’’ based on travel times or distance from public resources (Joseph and Phillips 1984; Talen 1998; Witten et al. 2003). Due to data availability, most of the case studies are conducted on a larger scale or on zonal data in a certain area (census tract, the traffic analysis zone, or zip code). However, these kinds of data may be inadequate for analyzing social equality for a localized facility (Hewko et al. 2002). Hence, geographic distance measured by straight-line distance and shortest network distance or shortest network time might be the simplest and most applicable way to determine accessibility (Apparicio and Seguin 2006). In this study, we measure straight-line distances between housing units and the nearest railway stations, schools and hospitals. We avoid using network distance because the paths and roads around affordable housing are changing in time.

5 Spatial patterns of eligible households and affordable housing programs 5.1 Data There are two types of data used in the study. The first is about information of eligible households applying for affordable housing in Beijing; the second is completed ECH units in Beijing. A household is defined as being composed of a person or group of persons who co-reside in, or occupy, a dwelling in this study. The data on eligible household are obtained from Beijing Housing Indemnity Office (BHIO) in Beijing Municipal Commission of Housing and Urban–Rural Development. This is the unique database and it includes total approved applicants for affordable housing in Beijing from 2007 up to March of 2010, in which includes more than 40, 000 households were approved as eligible for ECH. The general allocation policy of affordable housing in China is approved by a three-tier approval system of the local housing authority including city, district and street. Meanwhile, the applicant’s name will be displayed in the neighborhood for public scrutiny, and his financial situation is subject to regular reviews during his approving process. The effort of such a regulation is to master reliable information on applicant’s social and economic status. All the households included in our database are households in Beijing who pass the approval process and are qualified for affordable housing. Therefore, the common question on the reliability of household’s income in the Chinese study is believed to be minimal in our database. In the data, annual income refers to total after tax household income including salary, subsidies, income from financial assets and income from unregulated job. Basic economic and social information of eligible households are included in the dataset. The high quality of the data enhances the valuable of the study. However, we do not have

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Z. Yang et al. Table 2 Major characteristics of eligible households for ECH in Beijing Distribution (%)

One-person household (%)

Two-person household (%)

Three-person household (%)

More than three-person household (%)

Annual income (RMB) 0–15,000

52.90

23.39

13.57

8.22

15,001–20,000

31.03

15.55

10.07

7.33

20,001–25,000

15.98

16.17

12.55

10.46

25,001–30,000

0.01

19.20

15.07

12.00

30,001–60,000

0.08

25.69

48.74

61.99

Family assets (RMB) 0–50,000

88.36

44.67

27.86

18.81

50,001–100,000

11.57

30.38

24.10

19.69

Above 100,000

0.07

24.94

48.04

61.50

Distribution (%)

1–6 years old

7–12 years old

13–15 years old

16–18 years old

34.80

31.60

16.00

17.60

Age of children

Distribution (%)

Below 20

21–30

31–40

41–50

51–60

Above 61

13.40

28.40

30.20

19.60

8.30

Age of head of household 0.10

Sources: Beijing Housing Indemnity Office (BHIO) in Beijing Municipal Commission of Housing and Urban–Rural Development Note: RMB refers to Renminbi, the Chinese currency US$1 = RMB6.812, EUR1 = RMB 8.254 up to December 30, 2012

the detail location of working units of the household in the dataset, which limits us to measure distance or travel time between housing and job. Total ECH projects in Beijing from 2008 to 2010 are obtained from Beijing Municipal Commission of Housing and Urban–Rural Development. All 36 ECH projects in Beijing are included in our study. 5.2 Spatial patterns of approved household and ECH units in Beijing Table 2 summarizes the major characteristics of the eligible households for the ECH programs. We can see that more than half of the one-person households for ECH have annual income below 15,000 RMB (EUR 1,825.48). Half of two- or three-person households and nearly 40 % of more than three-person households have annual income less than 30,000 RMB (EUR 3,650.97). With regard to family structure and child ages, we can see that more than half of the eligible households have children old enough to attend primary or middle school, and more than 80 % of households are working class. In Fig. 2, we map the proportion of the eligible households according to their location when they apply for affordable housing across eight urban districts.12 We also plot the spatial patterns of total ECH in Beijing from 2008 to 2011. The figures show that more than 80 % of 12 In 2011, four districts are combined into two districts lessening the total number of districts from eight to six.

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applicants are from the eight central districts and concentrate more in the eastern part and southwestern urban areas of Beijing. However, when we examine the spatial pattern of the ECH, we find that large portions of the ECH are distributed out of the central districts and far from the central area. None of the ECH projects are located within the second ring of Beijing and only five are located within the third ring. Twenty-six ECH projects are located in the fifth and sixth rings, and several projects are distributed outside the sixth ring.

6 Affordability and accessibility of ECH households 6.1 Affordability of housing costs for low-income households In this section, we calculate the affordability of approval eligibility for ECH households from 2007 to 2009 using the residual income approach. The sale prices per square meter of ECH housing obtained from the BHIO are used. An average construction area per capita 30 m2 is used to calculate the total costs of ECH referenced by the BHIO. A standard repayment loan for affordable house in China is one in which the down payment is less than 20 % of the total value and the loan maturity is a maximum of 30 years. In Table 3, we show the annual amortization and the minimum required budgets for purchasing ECH. By simply measuring the gap between these minimum required budgets and the actual income of a family (shown in Table 2), we can obtain the affordability of ECH debt payments. Further, we can give a general overview of down payment affordability by comparing total household asset value with required ECH down payments. We find that the affordability of eligible households is worse in 2009 than in 2008 and 2007. One-person households have the most difficulty in housing affordability, while

Legend ECH Size (square meter) 5000-24000 24001-65000 65001-140000 140001-250000 250001-770000 Ring District Distribution of eligible households(%) 6.9-7.0 7.1-9.4 9.5-11.0 11.1-11.8 11.9-19.8

Fig. 2 Spatial distribution of eligible households for ECH and ECH units. Source: Beijing Housing Indemnity Office (BHIO) in Beijing Municipal Commission of Housing and Urban–Rural Development

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Z. Yang et al. Table 3 Household affordability for ECH by households size (RMB) 2007 Household size

2008

2009

125,010

One-person household

Total price

86,070

114,390

Down payment (20 %)

17,214

22,878

25,002

Amortization (yearly)

6,018.467

6,605.623

7,148.571

Non-housing expenditure (yearly)

10,788

11,484

13,572

Required minimum income (yearly)

16,806.47

18,089.62

20,720.57 250,020

Household size

Two-person household

Total price

172,140

228,780

Down payment (20 %)

34,428

45,756

50,004

Amortization (yearly)

12,036.93

13,211.25

14,297.14

Non-housing expenditure (yearly)

7,440.00

7,920.00

9,360.00

Required minimum income (yearly)

19,476.93

21,131.25

23,657.14

Household size

Three-person household

Total price

258,210

343,170

Down payment (20 %)

51,642

68,634

375,030 75,006

Amortization (yearly)

18,055.40

19,816.87

21,445.71

Non-housing expenditure (yearly)

11,160.00

11,880.00

14,040.00

Required minimum income (yearly)

29,215.40

31,696.87

35,485.71

2

1. Average sizes of 30 m per capita (construction area) are used to calculate total ECH costs 2. Loan maturity at 30 years is assumed in the estimation. This is currently the longest term for a bank mortgage loan for affordable housing 3. The mortgage rate used in the calculation is 7.83 % at the 2007 level, 5.94 % at the 2008 level and 6.94 % at the 2009 level 4. Non-housing expenditure is calculated using the poverty line which is yearly published by Beijing Civil Affairs Bureau 5. RMB refers to Renminbi, the Chinese currency US$1 = RMB6.812, EUR1 = RMB 8.254 up to December 30, 2012

two-person families are relatively better. In 2009, more than 80 % of one-person households and more than 50 % of three-person households are not affordable for ECH.13 This level was around 40 % for the two-person households. For most households, down payment affordability is not a severe problem given the asset value shown in Table 1. More than 50 % of eligible households show affordable ECH down payments. 6.2 Public service accessibility To examine public service accessibility in affordable programs from 2008 to 2009, we will conduct locational analysis of affordable housing projects and public service distribution patterns. As pointed out above, services including public transportation, elementary and middle schools and hospitals will be measured in the study. 13 If we use average non-housing consumption of bottom 40% household based on Beijing Municipal Bureau of Statistics, we get the same results for the one-person households. While for the two-person and three-person households, they have much worse situation on affordability compared to what we get in Table 3.

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The position of the ‘‘kingdom of bike’’ of China has been totally shaken with the developments of private cars and public transportations in the urban. From year 2005 to 2010, the total amount of the private car increased from 179.8 ten thousand to 390.9 ten thousand, which, respectively, account for over 29 to 34 % of the total traffic modal in Beijing. In 2005, the proportion of bus and trolley, subway and light rail in the modal split to work is 24.5, 5.7 and 7.6 %, respectively, while in 2010 they are changed to 28, 12 and 6.6 %, others are shared by private car (34 %), bicycle (16.4 %) and others (3.1 %) in 2010. In this study, we use subway stations including light rail instead of regular bus stops to examine public traffic conditions because the subway is currently the most convenient and least traffic-congestive mode of public transportation in Beijing. It has been argued that residences near subway stations display much higher accessibility compared with residences near bus stops. So neglecting bus stops will not influence our main results on public transportation accessibility. With regard to subway accessibility, the Euclidean distance (straight line) between a unit and its nearest subway on average is 2.46 km in ECH. More than 22.6 % of ECH projects are less than 1 km from their nearest subways, and more than 70 % of ECH projects are within 3 km of a subway. Given the assumption on average walking speed of 4.5 km/per hour, people commuting time from ECH to subway on average is far more than 10 min that is defined as satisfied commuting time by walk. People who have good access to transportation can easily commute between home and work, which would decrease household’s cost. More importantly, for the low- and medium-income household, accessibility to public transportation is one of the main factors determining the accessibility to employment (Helling 1998; Horner 2002) as well as the possibility to hold the job (Ihlanfeldt and Sjoquist 1998; Shen 2000). The effect of limited transportation options on job accessibility and their contributions to a poor labor market of disadvantaged welfare recipients has been widely investigated (e.g., Blumenberg et al. 2002; Wang 2003; Allard and Danziger 2002; Parks 2004). This is because that, in general, low-income workers tend to have irregular and long working hours, but they could not afford private cars and have to depend heavily on public transport (Lau and Chiu 2003). Given the fact shown in Table 2, most applicants for ECH are working class in Beijing. Given the discussion above, the spatial mismatch between a unit and public transportation also suggests a job/housing relationship. It is reasonable to assume that a lack of public transportation would increase the expense of household living in ECH and make finding and keeping a job difficult, which is an obvious obstacle in improving their social and economic status. Due to data availability issue, we cannot identify the travel distance between job and work for the eligible households, but we highlight their spatial mismatch by shown the concentrations of overall employment in Fig. 3. As we can clearly see that job density pattern shows that the majority of the jobs in Beijing are located in central city areas. Figure 4 plots public school accessibility including good quality elementary and middle schools14 relative to ECH. It shows that schools are rather concentrated within the fifth ring, which causes low accessibility from ECH. Other than a few ECH projects located within the fourth ring or in the western part of Beijing, residents have very poor accessibility to schools. We find that ECH projects are 2.80 km averagely from the closest elementary school. Given that Table 2 shows that more than 50 % of eligible households 14 The schools are selected according to the criteria distributed by the Beijing Municipal Education Commission. It includes 13 items including such as organization, number of teachers, scrod of student, extracurricular activities.

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Legend ECH Size (square meter) 5000-24000 24001-65000 65001-140000 140001-250000 250001-770000 Railway station District Job Density (per square kilometer) 0-2000 2001-2200 2201-2500 2501-3000 3001-6000 6001-12000 12001-18000 18001-20000

Fig. 3 Job density, distribution of railway station and locations of ECH projects

Legend Middle school Preliminary school ECH Size (square meter) 5000-24000 24001-65000 65001-140000 140001-250000 250001-770000 Ring District

Fig. 4 Distribution of elementary and middle schools, and locations of ECH

have children old enough to attend elementary or middle school, affordable projects that are isolated from schools could add heavy costs to low-to-medium-income households and increase their financial burden.

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Legend Hospital ECH Size (square meter) 5000-24000 24001-65000 65001-140000 140001-250000 250001-770000 Ring District

Fig. 5 Distribution of hospitals and locations of ECH

Figure 5 shows the spatial distributions of ECH relative to hospitals. In the general overview, hospitals in Beijing are located in the central city area, which is rather difficult to access from most of the affordable projects, particularly in the eastern and northern parts of Beijing. Hospital distribution disparity has been a cause for concerning of Beijing’s local government since 2007. As shown in Fig. 5, several high-standard hospitals were recently established near the fifth ring, and the local government has made a general plan to disperse hospitals across urban and suburban areas in the region in the near future. Currently, the average distance between affordable projects and their closest hospitals is 2.43 km for ECH. As a summary of this section, we should notice that affordability and accessibility are estimated separately in our paper. In fact, according to our discussion on the concept of housing affordability, accessibility can be integrated into housing cost in affordability measuring. This developed approach can directly address the spatial opportunity of housing in housing affordability, which can benefit to the policy option on precise understanding the effects of public amenities in households’ costs. However, further information on housing units, which is not available for the current study, is required in this case. We will leave it for the future study. 7 Concluding remarks China’s affordable housing supply is increasingly viewed as a social and political issue because skyrocketing prices have raised concerns of widening inequality among households as well as unsustainable economic development. In Beijing, total 80, 000 new affordable housing units completed in 2012, and more than 500, 000 affordable housing units were planned for construction during 2013 to 2015.

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Despite the benefits it would ostensibly create, a successful housing program is not only estimated by the number of affordable dwellings supplied, but also challenged by the extent to which the programs meet household needs concerning both affordability and accessibility. Based on the unique database of the paper, this study analyzes the affordability and accessibility of affordable programs in Beijing, namely Economic and Comfortable Housing. We find that low- and medium-income households fall far short of the level required for the subsidized housing to be affordable. We also find significant spatial mismatches between the affordable residences and public services including hospitals, schools and public transportation. Affordable housing policies fail to make housing affordable and accessible for eligible households. Production is a necessary component of responsible affordable housing policy, but it is far from the whole. Affordable housing is important to an eligible family’s life prospects and, in turn, their impact on urban economy. We argue in the paper that housing policy should not only target on housing expenditures of household by providing low price housing units, but also household opportunities linked to location by offering public services accessibility. Currently, efforts to tackle household housing problem only focus on increasing housing construction to make affordable housing economically viable in China. Other important issues on affordable housing spatial implication of household well-being are ignored. Although improving public transportation, particularly on subway, has been on the Beijing development agenda, this focus primarily on improving general traffic congestion in urban and less has been designed to target on affordable housing accessibility. Similar, government action on prompting school and hospital supply to arrive eligible household and integrating this into housing policy design is still shorting. It calls Chinese Government to refine housing policy by advocating social judges with respect to public transportation, school and hospital. Accessible railway station, school and hospital to the low- and medium-income household should be included mandatorily in affordable housing plan. However, to develop housing at an affordable and accessible location requires a comprehensive and effective method. In the present, the responsibility of affordable housing provision in China rests almost entirely on local government. It is the role of central government to ensure that eligible households receive the highest quality housing and services in their time of greatest need. It is important for them to integrate affordable housing allocation into the widely coordinated context of urban planning, and to ensure that affordable housing communities are designed with good access to public services. However, this does not necessarily mean that government is the sole agent in affordable housing provision. Affordability programs in China have not successfully brought housing prices and accessibility within reach of the targeted income groups may imply that expansion of public/private partnerships could provide an effective model for the type of affordable housing that has been awarded worldwide (UNECE 2004). By introducing accessibility to public services, this paper provides a new idea for the housing affordability study. It highlights the importance of public transportation, school and hospital in the total cost of the low- and medium-income households, and the way influence their life. A further research on combing affordability and accessibility into an affordability assessment is important. Acknowledgments We would like to acknowledge the funding of Nature Science Foundation of China (No. 71073090) and Nature Science Foundation of China (No. 09&ZD042).

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