Association for Public Policy Analysis & Management

Housing prices have been fast-growing since 1998. Twenty years after the privatization of residential housing market, China has leapfrogged from a country primarily with public provision of housing to a country with private house ownership as the dominant form in urban areas. National average housing price has more than doubled from 2100 yuan per square meter in 2000 to 5000 yuan per square meter in 2010 (Li Lixing and Wu Xiaoyu, 2014). The booming housing market in the People’s Republic of China has created widening property wealth gaps (Jie Chen and Xuehui Han, 2014) and the value of one’s housing has become the determining factors in one's class and social status in urban China. The rapid accumulation of wealth through house ownership has not only enriched the owners in monetary terms but also has empowered them in many ways. Highly sought-after properties often allow their owners easy access to public services such as quality education and transportation. It is reasonable to postulate that the house owners and those who have high home equity tend to hold more amicable views towards government and are more contented with their lives and have high confidence in the prospects of their lives (Feng Hu, 2013).

On the other hand, however, these urban middle class might be more concerned about the security of their property rights and house values and demand more in terms of quality of services and governance. It has been documented by Jun Li and Hongbo Wang (2012) in residential committee voting and Yongshun Cai (2005) in defending violation of their ownership rights although their approach tend to be more pragmatic and moderate when it comes to confront the authorities (Yongshun Cai, 2005 and An Chen, 2002). Therefore, whether house ownership is positively associated with ones' political satisfaction and self-perception remains an empirical question.

Existing literature focus primarily on the comparison between house owners with non-owners with the rare exception of the Lixing Li and Xiaoyu Wu (2014). Yet house ownership became a ubiquitous phenomenon in urban China. Exploit the newly-available panel data from China Family Panel Study 2010 and 2012, this paper examines the effect of housing prices appreciation on a wide variety of measures on political satisfaction and self-perception in China.

Our results from OLS regressions and fixed effects models show that overall housing values are positively correlated with one’s evaluation with the government effectiveness and their self-perception. We also find that these outcome variables go in tandem with the capital gains in house purchase but are at odds with their burden to repay the mortgage.