The Impact of Parental Wealth on the Transition to Homeownership in Urban China

Nearly 20 years after the commercialization of housing, the intergenerational dimension of housing attainment in China has not been fully explored. This paper contributes to the literature by examining the impact of parental wealth on adult children’s transitions to homeownership. Young people’s transitions from renting to owning are conditional on leaving the parental home, and conversely, the prospect of purchasing a self-owned residence within a short period of time may play a role in the decision about moving out. As successive transitions are perhaps interlinked with each other through people’s anticipation, I combine a bivariate probit selection model with a discrete time event history analysis to jointly model the timing of nest-leaving and home acquisition. Based on four waves of China Family Panel Survey data, I find that offspring of wealthy parents are more likely to become homeowners and tend to do so sooner than others once they become financially independent from the parental household. In the case of urban China, this paper thereby provides evidence that parents’ assets can give offspring a head start in living standards and portfolio build-up during their early adulthood. This paper reveals that housing acquisition is a critical mechanism through which the newly emergent wealth inequality is transmitted across generations in post-socialist China. Additionally, it develops an innovative strategy to address interdependent life course transitions which potentially have broad applications.