The impact of housing affordability prospects on youth’s residential decisions: evidence from a discrete choice experiment with university undergraduates in Shanghai

Source abstract

From the perspective of prospect theory, this study employs a discrete choice experiment (DCE) analyzed with mixed logit models to examine how housing affordability prospects influence youth’s residential decisions. The DCE was conducted with undergraduate students from local universities in Shanghai through hypothetical scenario-based choice tasks simulating housing market entry decisions. The results show that: (1) mixed logit models incorporating reference-dependent prospect values substantially outperform conventional models relying on raw debt-to-income ratio (DTI) and rent-to-income ratio (RIR) in both statistical fit and behavioural realism. (2) Debt-to-income ratio prospects (DTIP), rent-to-income ratio prospects (RIRP), housing support policies, and school district quality positively influence young people’s residential decisions, while commuting time and neighbourhood circle attributes have negative effects. (3) High-income scenarios strengthen young people’s preference for DTIP and weaken their preference for RIRP. As income levels increase, young adults will show greater aversion to longer commuting times and poorer neighbourhood accessibility, exhibiting stronger preferences for high-quality school districts. However, income scenarios do not significantly moderate the effects of housing support policies. These findings provide empirical evidence on the decision-making mechanisms of youth in the housing market and offer valuable policy implications for designing interventions to address youth housing affordability challenges.