Effects of Incomplete Property Rights on Informal Housing Prices: Evidence from Small Property Rights Housing of China
Publication: Journal of Urban Planning and Development
Volume 149, Issue 4
Abstract
Incomplete property rights are a prominent feature of informal housing that differs from formal ones. Without complete property rights, dwellers’ behavior might be constrained by formal institutions; therefore, informal houses tend to be valued lower in the market. However, more empirical evidence is needed to disclose the interaction between property rights status and informal housing prices, because of variations in the formal systems between regions. Looking at a type of informal properties named small property rights housing (SPRH) in China, this study aims to investigate the impact of incomplete property rights on informal housing prices. The findings of the empirical estimation demonstrate that: (1) because of incomplete property rights, the average price of SPRH units could fall by 69.15% compared with the equivalent formal housing units with full property rights; (2) the detrimental effect of building age on the housing price can be depressed by incomplete property rights, because a long duration can give dwellers confidence to hold their informal properties stably in the long term; and (3) although communal facilities, such as lifts can make dwellers’ lives more convenient, the lack of complete property rights lowers the value contribution of communal facilities to the overall price of housing units. This study provides valuable evidence from China to enrich the current literature on the informal housing market in the global south, and the findings could help formal authorities to understand the valuation principle of housing products in the absence of complete property rights.
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Data Availability Statement
Some or all data, models, or codes that support the findings of this study are available from the corresponding author upon reasonable request.
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Journal of Urban Planning and Development
Volume 149 • Issue 4 • December 2023
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Received: Nov 1, 2022
Accepted: May 16, 2023
Published online: Jul 17, 2023
Published in print: Dec 1, 2023
Discussion open until: Dec 17, 2023
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