Income inequality and access to housing: Evidence from China

•Income inequality is significantly associated with housing-price-to-income ratio.•Income inequality negatively affects low-income households' access to housing.•Rise in income of others hurt poor households in terms of worse housing condition.•Product differentiation has moderating effects on the impact of income inequality.

Economic theory suggests that income inequality predicts housing price and housing affordability for low-income households. Employing Chinese urban household survey data, this paper examines empirically the relationship between income inequality and access to housing for urban low-income households. The empirical results demonstrate that higher income inequality within cities is significantly related to a higher housing cost burden, a smaller per capita living space, and lower housing quality for low-income households. Further studies demonstrate that the negative impacts of income inequality could be moderated by product differentiation in housing markets, as a higher degree of differentiation in the size of housing units corresponds to a smaller effect of income inequality on housing affordability.