How does China’s housing affordability affect urban innovation?
DOI: https://doi.org/10.3846/ijspm.2026.27794Abstract
The primary objective of this paper is to examine the complex mechanisms governing the influence of housing supply-demand dynamics and affordability on urban innovation levels in China. Specifically, we dissect the interplay between housing affordability, human capital, and the intermediary pathways connecting them. Our empirical analysis reveals that an escalation in the housing supply-demand ratio inhibits urban innovation levels by traversing through the intermediary channels. Moreover, our investigation uncovers notable disparities in the chained intermediary effects between innovative and non-innovative pilot cities. In innovative pilot cities, an increase in the housing supply-demand ratio represses urban innovation levels, whereas, in non-innovative pilot cities, it augments them.
Keywords:
housing affordability, human capital, chain intermediary effect, urban innovation, ChinaHow to Cite
Share
License
Copyright (c) 2026 The Author(s). Published by Vilnius Gediminas Technical University.
This work is licensed under a Creative Commons Attribution 4.0 International License.
References
Beracha, E., He, Z., Wintoki, M. B., & Xi, Y. (2022). On the relation between innovation and housing prices – A metro level analysis of the US market. Journal of Real Estate Finance and Economics, 65, 622–648. https://doi.org/10.1007/s11146-021-09852-2
Bramley, G., & Karley, N. K. (2005). How much extra affordable housing is needed in England? Housing Studies, 20(5), 685–715. https://doi.org/10.1080/02673030500213938
Caragliu, A., & Del Bo, C. F. (2019). Smart innovative cities: The impact of Smart City policies on urban innovation. Technological Forecasting and Social Change, 142, 373–383. https://doi.org/10.1016/j.techfore.2018.07.022
Cheng, J., Zhao, J., Zhu, D., Jiang, X., Zhang, H., & Zhang, Y. (2022). Land marketization and urban innovation capability: Evidence from China. Habitat International, 122, Article 102540. https://doi.org/10.1016/j.habitatint.2022.102540
Chu, Z., Chen, X., Cheng, M., Zhao, X., & Wang, Z. (2024). Booming house prices: Friend or foe of innovative firms? The Journal of Technology Transfer, 49(2), 642–659. https://doi.org/10.1007/s10961-023-10005-1
Cui, T., & Chen, X. (2021). Population mobility and urban innovation capability: Evidence from Chinese sub-provincial cities and municipalities. Science and Technology Management Research, 41(11), 23–30.
Diamond, R. (2016). The determinants and welfare implications of US workers’ diverging location choices by skill: 1980-2000. American Economic Review, 106(3), 479–524. https://doi.org/10.1257/aer.20131706
Ding, Y., Chin, L., Lu, M., & Deng, P. (2023). Do high housing prices crowd out young professionals?–Micro-evidence from China. Economic Research-Ekonomska Istraživanja, 36(2), Article 2162832. https://doi.org/10.1080/1331677X.2022.2142832
Gu, H., & Jie, Y. (2024). Escaping from “dream city”? Housing price, talent, and urban innovation in China. Habitat International, 145, Article 103015. https://doi.org/10.1016/j.habitatint.2024.103015
Hancock, K. E. (1993). ‘Can pay? Won’t pay?’ or economic principles of ‘affordability’. Urban Studies, 30(1), 127–145. https://doi.org/10.1080/00420989320080081
He, Z. H., Sui, S. M., & Wang, J. L. (2022). The effect of housing price on enterprise innovation from the perspective of innovation investment and talent policy. Studies in Science of Science, 40(12), 2281–2293. https://link.oversea.cnki.net/doi/10.16192/j.cnki.1003-2053.20220215.002
Huang, Y. (2022). Research on the affordability and demand matching of youth housing. Guangzhou University.
Jin, X., Yu, H., Yi, F., Chen, L., & Wang, S. (2023). Tolerance for housing unaffordability among highly skilled young migrants: Evidence from the Zhejiang province of China. International Journal of Environmental Research and Public Health, 20(1), Article 616. https://doi.org/10.3390/ijerph20010616
Kiyotaki, N., & Moore, J. (1997). Credit cycles. Journal of Political Economy, 105(2), 211–248. https://doi.org/10.1086/262072
Chau, K. W., Lai, L. W. C., Liang, J., Ng, F. F., & Wong, K. T. (2021). The negative impact of public sector-led redevelopment projects on the prices of old and new housing units in high density urban areas. International Journal of Construction Management, 21(11), 1156–1164. https://doi.org/10.1080/15623599.2019.1604113
Cooke, F. L. (2013). Human resource development and innovation in China: State HRD policies, organizational practices, and research opportunities. Journal of Chinese Human Resource Management, 4(2), 144–150. https://doi.org/10.1108/JCHRM-05-2013-0016
Li, J., Lyu, P., & Jin, C. (2023). The impact of housing prices on regional innovation capacity: Evidence from China. Sustainability, 15(15), Article 11868. https://doi.org/10.3390/su151511868
Li, L., & Zhang, X. (2020). Spatial evolution and critical factors of urban innovation: Evidence from Shanghai, China. Sustainability, 12(3), Article 938. https://doi.org/10.3390/su12030938
Lin, X., Ren, T., Wu, H., & Xiao, Y. (2021). Housing price, talent movement, and innovation output: Evidence from Chinese cities. Review of Development Economics, 25(1), 76–103. https://doi.org/10.1111/rode.12705
Liu, J. J., & Shi, D. Q. (2019). High housing prices and enterprise innovation: Crowding in or crowding out? Measurement and calculation based on bilateral stochastic frontier model. China Soft Science, 9, 150–165. https://doi.org/10.3969/j.issn.1002-9753.2019.09.014
Liu, N., Liu, J., & Li, Z. (2024). The spatial effects of housing prices on innovation in cities: Evidence from the Yangtze river economic belt in China. International Journal of Urban Sciences, 28(3), 545–566. https://doi.org/10.1080/12265934.2024.2317182
Lu, B., Tan, X., & Zhang, J. (2019). The crowding out effect of booming real estate markets on corporate TFP: Evidence from China. Accounting & Finance, 58(5), 1319–1345. https://doi.org/10.1111/acfi.12451
Pradana, M., Pérez-Luño, A., & Fuentes-Blasco, M. (2020). Innovation as the key to gain performance from a bsorptive capacity and human capital. Technology Analysis & Strategic Management, 32(7), 822–834. https://doi.org/10.1080/09537325.2020.1714578
Mak, S. W. K., Choy, L. H. T., & Ho, W. K. O. (2007). Privatization, housing conditions and affordability in the People’s Republic of China. Habitat International, 31(2), 177–192. https://doi.org/10.1016/j.habitatint.2006.11.003
Moretti, E. (2011). Local labor markets. In Handbook of labor economics (Vol. 4, pp. 1237–1313). Elsevier. https://doi.org/10.1016/S0169-7218(11)02412-9
Roback, J. (1982). Wages, rents, and the quality of life. Journal of Political Economy, 90(6), 1257–1278. https://doi.org/10.1086/261120
Rong, Z., Wang, W., & Gong, Q. (2016). Housing price appreciation, investment opportunity, and firm innovation: Evidence from China. Journal of Housing Economics, 33, 34–58. https://doi.org/10.1016/j.jhe.2016.04.002
Stone, M. (1993). Shelter poverty: New ideas on housing affordability. Temple University Press.
Strange, W., Hejazi, W., & Tang, J. (2006). The uncertain city: Competitive instability, skills, innovation and the strategy of agglomeration. Journal of Urban Economics, 59(3), 331–351. https://doi.org/10.1016/j.jue.2005.10.006
Torab, E. S. (2018). A law or just a hypothesis? A critical review of supply and demand effect on the affordable residential markets in developing countries. Alexandria Engineering Journal, 57(4), 4081–4090. https://doi.org/10.1016/j.aej.2018.10.010
Wang, X.-R., Hui, E. C.-M., & Sun, J.-X. (2017). Population migration, urbanization and housing prices: Evidence from the cities in China. Habitat International, 66, 49–56. https://doi.org/10.1016/j.habitatint.2017.05.010
Whitehead, C. M. E. (1991). From need to affordability: An analysis of UK housing objectives. Urban Studies, 28(6), 871–887. https://doi.org/10.1080/00420989120081101
Xia, G. F. (2011). The impact of high housing prices on the career choices of university graduates. China Youth Study, (6), 56–59.
Xu, D., Gu, X., Xu, M., & Li, X. (2024). How can land-use practices be modeled? Understanding the influence of knowledge, attitudes and emotional connections on urban residents’ behavioral intentions regarding peri-urban areas from an MLU perspective. Habitat International, 145, Article 103038. https://doi.org/10.1016/j.habitatint.2024.103038
Yin, G. Y., Han, Y. T., Sun, J. S., & Liu, Z. (2022). Measurement of housing affordability and analysis of influencing factors among urban residents in shandong province. Real Estate World, 21, 33–37.
Yin, S., Jiang, X., & Jiang, H. (2023). The relationship between housing price, innovation ability and urban quality in the Yangtze River Delta region based on the PVAR model. Geographical Research, 42(10), 2738–2758.
You, S., Zhou, K. Z., & Jia, L. (2021). How does human capital foster product innovation? The contingent roles of industry cluster features. Journal of Business Research, 130, 335–347.
Yu, L., & Cai, Y. (2021). Do rising housing prices restrict urban innovation vitality? Evidence from 288 cities in China. Economic Analysis and Policy, 72, 276–288. https://doi.org/10.1016/j.eap.2021.08.012
Zhang, W., Cong, T., & Ying, H. (2022). Research on the influence of real estate investment on industrial enterprise innovation. Industrial Engineering and Innovation Management, 5(10), 64–68. https://doi.org/10.23977/ieim.2022.051008
View article in other formats
CrossMark check
Published
Issue
Section
Copyright
Copyright (c) 2026 The Author(s). Published by Vilnius Gediminas Technical University.
License
This work is licensed under a Creative Commons Attribution 4.0 International License.