Urban Village Redevelopment and Local Housing Market in China

Abstract

With rapid urbanization taking place in China in recent decades, urban village redevelopment is increasingly recognized as a viable strategy to promote efficient land use and urban revitalization, which entails externalities at the local level. This paper examines the external effects of urban village redevelopment on the local housing market over three project phases, i.e. before, during and after redevelopment. We apply a staggered difference-in differences model to the housing transaction data of Zhengzhou city, and our results reveal the presence of a positive spillover from urban village redevelopment to the local housing market. Specifically, during the project development phase, urban village redevelopment brings about a housing price premium of 4.9% within the treatment area. After project completion, redevelopment further contributes 4.9% to the local house price premium. These results are robust to heterogeneity in terms of the redevelopment project scale as well as the economic well being of the districts where the urban villages are located.

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