The policy of requiring local governments to build affordable housing encountered greater resistance in practice. The main reason is that the construction of affordable housing requires local governments to provide free land, which will cause two kinds of difficulties for them. One is that it reduces the land transfer revenue that the government can obtain. The other is that it increases the financial pressure on local governments. Therefore, in order to pursue more land transfer income (Motivation I) and get rid of the financial pressure (Motivation II), the government will deliberately avoid the supply of land for affordable housing. This chapter uses data from 105 cities to conduct an empirical test of the above phenomenon. The results show that Motivation II better predicts the behavior of local governments in avoiding the supply of land for affordable housing than Motivation I. The implications of the study are that the nation should relax the requirement for local governments to provide land for affordable housing and allow them to raise affordable housing through other means, such as using existing idle public housing or the government only providing rent subsidies instead of providing physical housing.

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Land Finance and the Dilemma of Affordable Housing Projects

  • Tan Rui

摘要

The policy of requiring local governments to build affordable housing encountered greater resistance in practice. The main reason is that the construction of affordable housing requires local governments to provide free land, which will cause two kinds of difficulties for them. One is that it reduces the land transfer revenue that the government can obtain. The other is that it increases the financial pressure on local governments. Therefore, in order to pursue more land transfer income (Motivation I) and get rid of the financial pressure (Motivation II), the government will deliberately avoid the supply of land for affordable housing. This chapter uses data from 105 cities to conduct an empirical test of the above phenomenon. The results show that Motivation II better predicts the behavior of local governments in avoiding the supply of land for affordable housing than Motivation I. The implications of the study are that the nation should relax the requirement for local governments to provide land for affordable housing and allow them to raise affordable housing through other means, such as using existing idle public housing or the government only providing rent subsidies instead of providing physical housing.