Contents lists available at ScienceDirect Land Use Policy journal homepage: www.elsevier.com/locate/landusepol Property rights with price tags? Pricing uncertainties in the production, transaction and consumption of China’s small property right housing Shenjing He ⁎ ,1 , Dong Wang, Chris Webster, Kwong Wing Chau Faculty of Architecture, The University of Hong Kong, Pokfulam Road, China ARTICLEINFO Keywords: Informal housing Property rights Transaction cost Small property right housing Pricing mechanism Uncertainties ABSTRACT The booming informal housing market has played an important role in providing inexpensive housing for lower income population in the developing world. In China, an informal housing strategy known as “Small Property Right Housing (SPRH)” is thriving on collective land owned by village collectives, and providing housing for more than a quarter of a billion people. Why and how the informal housing market has emerged and operates have been widely explored theoretically and empirically from the perspective of the peculiar arrangement of property rights that has created this market. Yet, we know very little about the pricing of this market, with its various constraints and uncertainties associated with the incomplete property rights. Most existing research takesastandarddichotomousviewofpropertyrightsandthusoverlooksthecomplexityofthedegreesofrights that make possible this thriving informal market. Our study takes the more heterodox idea of a bundle of propertyrightsthattakenasawholeconfersagradeddegreeofprotectiontoabuyeratproduction,transaction and consumption stage, to understand offer-price determination in the SPRH market of China. Drawing on a largedatabaseofSPRHrecordsinthecityofShenzhen,thisisamongthefirstattemptstoquantitativelyexamine the pricing mechanism of China’s informal housing market. Our results show that even without clearly defined property rights, a well-functioning market of SPRH can exist. We find that the ambiguous rights created by the informal institutions involved in the production, transaction and consumption of SPRH are capitalised in the price. This research is of theoretical and empirical significance to understand the dynamics of informal housing development and how the market behaves when property rights are ill-defined. 1. Introduction Skyrocketing housing prices in large Chinese cities make home- ownership an unachievable dream for many beneficiaries of China’s economic transformation. Despite a large quantity of affordable housing having been built by governments over the past decade, ac- cessibility remains a major problem in terms of the remote location of these new state-supplied housing and stringent allocation criteria. The large majority of rural migrants in the city, cumulating to more than 280 million in recent years, are excluded from the new wave of state- built housing. Against this backdrop, an informal housing strategy known as “Small Property Right Housing (SPRH)” is thriving on col- lective land that is owned by villagers under Chinese land law. By the endof2007,thetotalconstructionareaofSPRHhadreached6.4billion square meters, accounting for more than 17% of total housing stock in the whole country (Guo and Cai, 2009). Wang et al. (2014) estimated that SPRH provides living space for more than 71 million households, oraquarterofabillionpeople.SPRH’scontroversiallegalstatusmainly stems from the dual ownership structure in China’s land regime, which mandates state ownership of urban land and collective ownership of rural land. By law, collective land cannot be used for urban housing developmentbutthishasnotstoppeditbecominghometo280million. SPRH can therefore be seen as an informal countermeasure responding on the one hand, to the deficit of formal sector affordable housing supplyandontheother,totoweringhousingdemandfromlow-income groups and rural migrants. Thisinformalsettlementresponsehascertainpeculiaritiesthatsetit apart from similar phenomenon around the world and deserves studies to assess its efficiency as both a Chinese model and potentially, a scalable model for other countries. SPRH’s informality/illegality means that strictly speaking, rights to own them are inalienable. This is one aspect of their limited property rights. In the absence of strong en- forcement, village owners can develop their land into multiple-occu- pation homes but cannot legally sell them freely in an open market https://doi.org/10.1016/j.landusepol.2018.10.038 Received 31 March 2018; Received in revised form 15 August 2018; Accepted 21 October 2018 ⁎ Corresponding author at: Department of Urban Planning and Design, Faculty of Architecture, The University of Hong Kong, Pokfulam Road, China. E-mail address: sjhe@hku.hk (S. He). 1 The University of Hong Kong, Shenzhen Institute of Research and Innovation, Shenzhen, China. Land Use Policy 81 (2019) 424–433 0264-8377/ © 2018 Elsevier Ltd. All rights reserved. T